* Benchmark recovers from over 7-yr low hit on Monday

* RBA injects $4 bln liquidity into financial system

* Miner Rio Tinto flags hit to operations in S.Africa, Canada

* NZ benchmark up 7.2%, biggest daily gain ever (Updates to close)

March 24 (Reuters) – Australian shares jumped more than 4% on Tuesday, bouncing back from sharp falls in the previous session as investors cheered massive support measures from the U.S. Federal Reserve to temper the economic damage from the coronavirus pandemic.

The Fed on Monday promised unlimited asset purchases to support markets pummelled by widespread restrictions to arrest the virus outbreak, adding it will “soon” roll out credit programs to small and medium-sized business.

The S&P/ASX 200 index gained 4.2% to end at 4,735.70, recovering from a 5.6% drop on Monday.

“The Fed came out with unlimited quantitative easing and that is a positive in these markets. We are bouncing … but not sure that will hold,” said Mathan Somasundaram, a market portfolio strategist at Blue Ocean Equities.

Australia has imposed strict new lockdown rules as reported infections neared 2,000, with most states closing their borders to travellers from other parts of the country.

The heavyweight financials sub-index advanced 4.7%, with top lender Commonwealth Bank of Australia jumping 5.1% and Westpac Banking Corp gaining 2.9%.

Further boosting risk sentiment, the Reserve Bank of Australia pumped A$6.88 billion ($4.03 billion) into the financial system through its regular repurchase agreements, more than its original intention of A$1.48 billion.

Mining stocks were among the top gainers, with heavyweight BHP Group 5.1% higher. Stronger bullion prices helped gold miner Newcrest Mining gain 6.5%.

Global iron ore miner Rio Tinto closed more than 1% higher, recouping from a 2.3% drop earlier in the session. Rio said operations at its South Africa mine will be halted and activity in Quebec, Canada will slow down due to virus-related curbs.

In New Zealand, the benchmark S&P/NZX 50 index surged 7.2% to finish at 9,109.15, its biggest daily percentage gain ever. The index on Monday clocked its lowest finish since May 2018.

The country announced that retail banks would offer a six-month principal and interest payment holiday for mortgage holders and small business customers whose incomes have been affected by the economic disruption from COVID-19.

Utilities and healthcare sectors were among the top gainers, with electricity generator Mercury NZ soaring about 8%, and Fisher & Paykel Healthcare Corp jumping more than 10%. (Reporting by Sameer Manekar in Bengaluru; additional reporting by A K Pranav; Editing by Devika Syamnath)

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