Australian dollar breaks resistance to hit 2014 high

* Aussie hits three-month highs vs USD

* Aussie at 4-month peak on TWI

* RBA Deputy Gov to speak at conference

By Cecile Lefort

SYDNEY, March 25 (Reuters) - The Australian dollar rose on Tuesday to its highest level this year, driven by stop-loss buying that pushed it through several resistance levels and gave the New Zealand dollar a leg-up.

The Aussie AUD=D4 climbed as far as $0.9158, a peak not seen since mid-December, and was last at $0.9147. On a trade-weighted basis, it rose to its highest since November at 70.1 =AUD .

The next major resistance is seen at $0.9210, the 50 percent retracement of the currency's fall between October and January.

The Aussie has gained around a cent since dipping to around $0.9050 on Monday after a weak flash PMI reading for China, Australia's top export market, and is up about 2.6 percent this year.

"The message from Chinese policymakers is clear that even though Q1 growth will be a bit softer, they just won't let (the economy) collapse," said Sean Callow, currency strategist at Westpac.

The market, which often uses the Aussie as a liquid proxy to hedge against weakness in China, has trimmed its massive Aussie short positions. Data showed a net 24,500 short contracts last week, from 40,000 in the period before. News Search ID:nL2N0MI1KP

Also supporting the Aussie were some losses in the U.S. dollar against the yuan CNY=CFXS this week.

The gains through recent peaks of $0.9135, $0.9136 and $0.9138 were bullish technical signals that suggested further upside for the currency.

That could trigger a fresh round of verbal campaigning against the Aussie from central bank officials. The Reserve Bank of Australia (RBA) has long said the currency was historically high and a lower exchange rate would help rebalance the economy.

RBA Deputy Governor Philip Lowe is due to speak later in the day on "Opportunities and Challenges for Market-based Financing" and may be asked about the strength of the currency.

Governor Glenn Stevens speaks in Hong Kong on Wednesday.

Westpac's Callow expects the Aussie to remain well bid in the very short term, but does not see a trend change just yet, with 92 cents being a tough level to crack.

Across the Tasman sea, the New Zealand dollar NZD=D4 edged up to $0.8558, from $0.8543 in early trade, pulling closer to an 11-month peak of $0.8641 touched last week. It hovered near a 17-year peak against its Canadian counterpart.

Against a basket of currencies, it traded just under 80.00

=NZD , not far from last week's post-float high of 80.43.

Underpinning the kiwi are expectations of rising domestic interest rates. The Reserve Bank of New Zealand raised the official cash rate by 25 basis points on March 13, and markets expect another four increases in the coming year.

February trade data on Thursday is forecast to show a NZ$600 million surplus due to booming dairy exports. ECONNZ

New Zealand government bonds 0#NZTSY= were flat.

Australian government bond futures edged up, with the three-year bond contract YTTc1 up 1 tick to 96.930. The 10-year contract added 3.5 ticks to 95.855, but remained close to two-month lows of 95.795 touched earlier in the session.

(Editing by John Mair)

((Cecile.Lefort@thomsonreuters.com)(+61 2 9373-1234)(Reuters Messaging: cecile.lefort.thomsonreuters@reuters.net))

Keywords: MARKETS AUSTRALIA/FOREX