Iron ore miners power Australia shares to 1-week closing high

* BHP, Rio, FMG gain between 2.7% - 4%

* EML Payments plunges 14%, top loser on benchmark

* Tech stocks gain over 1% (Updates to close)

Oct 8 (Reuters) - Australian shares rose on Friday and notched their first weekly gain in five, powered by heavyweight miners on the back of firm iron ore prices, though tumbling shares of EML Payments due to regulatory scrutiny in Ireland shaved points off the benchmark.

The S&P/ASX 200 index .AXJO ended 0.9% higher at 7,320.1 points, its highest close since Sept. 30. For the week, the benchmark added 1.9%.

Also helping sentiment was Wall Street's strong finish on Thursday, as the debt ceiling standoff in the United States reached a truce.

"Stock market optimism appears to have returned ahead of the planned easing of coronavirus restrictions starting Monday," Kalkine Group CEO Kunal Sawhney said.

Stay-at-home orders in Sydney are due to be lifted after New South Wales state this week hit its 70% target of full vaccination for its adult population.

"Easing of lockdown restrictions may prompt a shift in investors' interest towards cyclical stocks in the days ahead. Any signs of an earlier-than-expected rise in interest rates could further spur this movement to cyclical stocks, " Sawhney added.

Miners .AXMM led gains with a 2.2% jump, as Dalian iron ore rose to a one-month high with trading resuming after a week-long holiday in China.

Heavyweights BHP Group BHP.AX and Rio Tinto RIO.AX climbed 3% and 4%, respectively, while Fortescue FMG.AX advanced 2.7%.

Tech stocks .AXIJ rose 1.3% and hit their highest close in a week, while financials .AXFJ jumped 0.9%.

On the downside, a 14% plunge in shares of payments solutions provider EML Payments EML.AX after Ireland's central bank issued regulatory warnings related to its Irish business weighed on the benchmark.

Terracom reversed early gains and closed 9% lower after the coal miner said a potential financier fell through, though it managed to secure refinancing for its debt with existing bondholders.

New Zealand's benchmark S&P/NZX 50 index .NZ50 closed 0.1% lower at 13,086.6.
Reporting by Arundhati Dutta in Bengaluru; Editing by Krishna Chandra Eluri

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