GLOBAL ECONOMY-Asian, European manufacturing picks up strongly

* Global manufacturing gathers pace, export orders climb

* Data suggest economic growth, consumer demand picking up

* China output, job creation up but price pressures building

* For a graphic see: http://r.reuters.com/jeh26j

(Recasts after European data)

By Jonathan Cable and Zhou Xin

LONDON/BEIJING, April 1 (BestGrowthStock) – Factories across Europe
and Asia cranked up production in March, business surveys showed
on Thursday, showing a strong recovery in fast-growing emerging
markets taking root in the developed West.

Activity across Europe bounced higher, with a cheaper euro
stimulating exports, while in the UK it expanded at its fastest
pace since 1994. China’s vast industrial sector moved up another
gear as well, beating expectations.

Comparable business data due later on Wednesday from the
United States are also expected to show activity picked up from
February. Key data due on Friday are also expected to show
employers hired 190,000 U.S. workers in March after cutting
36,000 in February. See [ID:nN31243484]

Stock markets were up across Asia and Europe on the first
trading day of the second quarter, initially spurred higher by
the upbeat data from China but underpinned by growing optimism
for economic recovery from the worst downturn in generations.

“We are seeing world trade booming, it’s recovering very
sharply. Emerging markets were driving this at the beginning but
developed markets are also now catching up,” said Nick Kounis,
economist at Fortis Bank in Amsterdam.

Manufacturing in the euro zone grew faster than previously
thought, with Markit’s Purchasing Managers’ Index (PMI) for the
region jumping to 56.6 in March from 54.2 the month before.

In Germany, the 16-nation bloc’s biggest economy,
manufacturing activity grew at a rate not seen in almost 10
years. France, the second biggest, saw its manufacturing sector
expand at a pace not seen since November 2006.

Across the channel, British manufacturing activity grew last
month at its fastest rate since October 1994, when the economy
was also recovering from a deep recession, but firms continued
to cut jobs in a bid to reduce costs. [GB/PMIM]

Debt-ridden euro zone member Greece, however, saw its
manufacturing sector contract at a sharper rate. [EUR/PMIM]

RATE CAUTION

China is back on course for the high single-digit percentage
growth it saw before the financial crisis. While monthly data on
production, sales and employment are improving in Europe, there
are still doubts its recovery is as convincing.

Data on Thursday also showed German retail sales fell more
than expected in February, suggesting that private consumption
will drag on an export-fuelled recovery that has soared on the
back of a weakening euro (EUR=: ). [ID:nLDE630055]

The European Central bank is not expected to raise rates
from their record low until early 2011 while economists think
the Bank of England will not budge from 0.5 percent until late
this year. [ECB/INT] [BOE/INT]

Australia, India and Malaysia have already started hiking
rates and China is likely not far behind. Dealers see a 59
percent chance the U.S. Federal Reserve will follow suit before
year-end. [FED/R]

China’s official PMI rose to 55.1 in March from 52.0 in
February, beating expectations and pointing to brisk
first-quarter GDP growth that could spur further policy
tightening by the central bank. [ID:nTOE62S02B]

The headline PMI from a parallel HSBC/Markit survey rose to
57.0, the third-highest level in the six-year history of the
survey, from 55.8 in February. A reading above 50 means activity
is expanding.

“Another substantially high headline manufacturing PMI
reading, combined with strong growth of exports, points to an
acceleration in industrial production and likely over 11 percent
GDP growth in the first quarter,” Qu Hongbin, chief economist
for China at HSBC, said in a statement on Thursday.

“With inflation pressures rapidly accumulating, this
increases the risk of interest rate hikes in the coming months.”

OPTIMISM

Investors are keen for more evidence that the recovery is
gaining momentum to justify the optimism that has pushed U.S.
and Japanese stocks to 18-month highs.

Strong demand from China, the world’s third-largest economy,
is proving a boon for its neighbours as Asia’s major Western
export markets have been far slower to recover.

South Korea reported March exports rose 35.1 percent from a
year earlier, beating an expected 32.9 percent rise.[nTOE62T0AB]

“Taking into account that our main trading partners are
China and other emerging markets and those markets are still
flourishing, we can expect a positive outlook for the first half
of the year,” said Kim Jae-Eun, an economist at Hyundai
Securities in Seoul.

Japan has also seen a steady recovery of exports, driven
largely by sales to China, offsetting weak domestic demand.

The Bank of Japan’s “tankan” survey on Thursday showed
morale among big manufacturers, the main beneficiaries of the
export rise, improved to its best since September 2008.
Manufacturing activity slowed slightly in March, but a rise in
export orders to the highest in almost six years suggested
production will grow. [ID:nTKC005777]
Stock Market Analysis

(Additional reporting by Langi Chiang and Alan Wheatley in
Beijing, Yoo Choonsik in Seoul and Stanley White in Tokyo;
writing by Kim Coghill; editing by Patrick Graham)

GLOBAL ECONOMY-Asian, European manufacturing picks up strongly