(Adds details, background throughout) Global dairy prices rose...

(Adds details, background throughout)

Global dairy prices rose on Wednesday for the fourth international auction in a row, a strong indicator that last year's recovery is back on track.

The GDT Price Index climbed 3.6 percent, with an average selling price of $3,166 per tonne, in the auction held in the early hours of Wednesday. The index had risen 3.1 percent at the previous sale.

After two years of declining prices, farmers and analysts had been concerned that a 50 percent rebound during 2016 could be temporary. Prices were also dented at the beginning of the new year as global supply increased.

Flooding in New Zealand, the world's largest dairy exporter, had raised concerns about sluggish production in the near term, which had helped been helping boost demand.

Much of the gain at the latest auction was on the back of buyers in China.

"There was strong participation in the auction by buyers from North Asia, said Amy Castleton, analyst at Agri HQ.

"A lack of profitability in China's own dairy farming sector has limited expansion of some farming operations and is expected to have some impact on their domestic milk supply," she added.

Prices for whole milk powder rose 5.2 percent, while skim milk powder fell 0.9 percent.

A total of 22,633 tonnes was sold at the latest auction, falling 1.3 percent from the previous sale.

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

The kiwi firmed to $0.6941 from $0.6905 per U.S. dollar before the auction.

GDT Events is owned by New Zealand's Fonterra Co-operative Group Ltd, 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.

The auctions are held twice a month, with the next one scheduled for May 16.