(Updates to close) July 13 (Reuters) - Australian shares...

(Updates to close)

July 13 (Reuters) - Australian shares finished higher on Thursday, tracking gains on Wall Street after U.S. Federal Reserve chief Janet Yellen signalled only a gradual tightening of monetary policy.

The S&P/ASX 200 index (xjo), recovering Wednesday's losses, rose 1.1 percent, or 62.97 points, to 5,736.80.

The benchmark closed at a three-week low in the previous session, falling nearly 1 percent to 5,673.8 - the second time this month it dropped below the psychologically important 5,700 level.

The Dow <.DJI> rose to a record high after Yellen's less hawkish than expected congressional testimony was seen as a green light for Wall Street to step up riskier trades. [.N]

Australia's financial index .AXFJ rose nearly 1 percent though U.S. counterparts .SPSY, which tend to benefit from higher rates, were last among sectors, closing up 0.1 percent.

The biggest banks by market value, Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC), were among the top gainers on the benchmark by weight, up 1.9 percent and 0.5 percent respectively.

Biotherapeutics firm CSL Ltd (CSL) was also among the top performers with its near 3 percent ascent helping the healthcare index .AXHJ have its best day since mid-January.

New Zealand's benchmark S&P/NZX 50 index (nz50) ended up 0.3 percent at 7,610.89, aided by industrial and healthcare shares.

Auckland International Airport (AIA) and Fischer & Paykel Healthcare Corp (FPH) were the benchmark's biggest gainers, 1.5 percent and 1 percent higher respectively.