How high should be the handle of a balance bike for a 35 inches tall kid? How should I decide about handle adjustment? 

Handle is adjustable upto 20 inches.
In general you should adjust a balance/strider bike so that:


When sitting on the seat their feet are flat on the ground with a
slight bend at the knees.
The handlebars are at about mid-torso height.


I usually tell people to worry about saddle height first, then handlebar adjustments.