(Adds analyst comment, details, market reaction) Global dairy...

(Adds analyst comment, details, market reaction)

Global dairy prices rose for the second time in a row at an international auction on Wednesday, strengthening hopes that last year's recovery is back on track.

Farmers and analysts had been concerned that a 50 percent rebound in prices during 2016, after two years of falls, could be temporary since prices were dented at the beginning of the new year as global supply increased.

The Global Dairy Trade Price Index climbed 1.6 percent, with an average selling price of $3,005 per tonne, in the auction held on early on Wednesday. The index rose 1.7 pct at the previous sale.

"Buyers will be aware that NZ dairy farmers are having a strong finish to the production season which means there is extra milk powder coming on line, so in this environment it is very positive to see whole milk powder prices creeping back up," said Susan Kilsby, dairy analyst at Agri HQ.

Prices for whole milk powder rose 2.4 percent, while skim milk powder fell 0.8 percent.

The auction results can affect the New Zealand dollar as the dairy sector generates more than 7 percent of the nation's gross domestic product.

The currency traded up a touch at $0.6986 immediately after auction, but fell to $0.6974 during the early hours of the morning as investors turned their attention to risks linked to a U.S./China summit.

GDT Events is owned by New Zealand’s Fonterra Co-operative Group Ltd (FCG), but operates independently from the dairy giant. U.S.-listed CRA International Inc is the trading manager for the twice-monthly Global Dairy Trade auction.

A number of companies, including Dairy America and Murray Goulburn (MGC), use the platform to sell milk powder and other dairy products.

A total of 22,642 tonnes was sold at the latest auction, an increase of 0.6 percent from the previous one, the auction platform said on its website

The auctions are held twice a month, with the next one scheduled for April 18.