China's manufacturing expanded for the first time in threemonths as output and new orders climbed, adding to signs growth inthe world's second biggest economy is rebounding after aseven-quarter slowdown.

The Purchasing Managers' Index climbed to 50.2 in October from49.8 in September, the National Bureau of Statistics and ChinaFederation of Logistics and Purchasing said today in Beijing. Aseparate survey from HSBC Holdings Plc and Markit Economics was atan eight-month high.

Shanghai's benchmark stock index rose the most in three weeks asthe reports added to evidence of a pickup in expansion this quarterafter industrial production, exports and retail sales acceleratedin September. The data may also reduce pressure on outgoing PremierWen Jiabao to roll out more stimulus measures during aonce-a-decade power handover that begins with a Communist Partycongress next week.

“The worst is behind us already,” Joy Yang, chief Greater Chinaeconomist at Mirae Asset Securities (HK) Ltd. in Hong Kong, said inan interview with Bloomberg Television. “Monetary policy hasalready done its job” and there's “no way we will see anotherinterest-rate cut because we think inflation is going torebound.”

China's economy expanded 7.4 percent in the third quarter from ayear earlier, the slowest pace in three years. Bank of AmericaCorp. in Hong Kong, this week raised its estimate forfourth-quarter growth to 7.8 percent from 7.5 percent while NomuraHoldings Inc. projects a rebound to 8.4 percent.

Surveys of manufacturing purchasing managers across Asiareleased today by HSBC and Markit Economics also improved, addingto evidence the worst of the declines in the region's economies maybe moderating.

The PMI for Taiwan was at its highest since June while a gaugefor South Korea rose after dropping the previous month. India'ssurvey showed manufacturing accelerated for the first time in fourmonths and in Russia the reading rose for a second month to itshighest since May.

In the U.S., manufacturing probably expanded for a second month.The Institute for Supply Management's factory index is expected tobe at 51.0 in October after a 51.5 reading the previous month,according to a Bloomberg survey ahead of data due today.Manufacturing PMIs for the euro area and the U.K. are also duetoday.

Asian stocks fell as a forecast from Japan's Panasonic Corp. ofa loss 30 times bigger than analysts estimated overshadowedmanufacturing improvements in the region's economies. The MSCI AsiaPacific Index declined 0.2 percent at 5:32 p.m. in Tokyo.

Earnings Growth

The Shanghai Composite Index, China's benchmark stock gauge,rose 1.7 percent, its biggest advance since Oct. 9. The index lost5.9 percent in 2012 up until yesterday on concern the slowingeconomy will depress earnings growth.

Copper gained for a third day, rising 0.6 percent at 7:05 a.m.in London. The Standard & Poor's GSCI gauge of 24 commoditieswas 0.2 percent higher at 5:38 p.m. in Tokyo.

Forecasts for China's official PMI ranged from 49.8 to 51.8, ina Bloomberg News survey of 30 economists that had a median estimateof 50.2. A reading above 50 indicates expansion. The index is basedon responses from purchasing managers at 820 companies in 31industries.

A gauge of output rose to 52.1, the highest since May, while anindex of new orders rose above 50 for the first time in six months,the statement showed. New export orders contracted for the fifthmonth although at a slower rate.

HSBC's survey showed manufacturing contracted at a slower pacein October. The final reading of the survey, which covers more than430 companies and is weighted toward smaller businesses, was 49.5,up from 47.9 in September and a preliminary reading of 49.1published last week.

HSBC's new orders gauge was at the second-highest level in 17months while new export orders contracted for a sixth month,according to the statement.

The survey implies “China's industrial activity continues tobottom out,” Qu Hongbin, chief China economist at HSBC in HongKong, said in a statement. “We expect a continuation of policyeasing to further boost domestic demand and counterbalance theexternal weakness, leading to a gradual growth recovery in thecoming quarters.”

Elsewhere in Asia today, Indonesia's inflation accelerated to a13-month high in October, reducing the scope for interest- ratecuts to counter falling exports. Consumer-price gains in Thailandunexpectedly slowed last month from a year earlier as governmentsubsidies helped contain rising food and fuel prices.

Monetary Easing

In Europe, data from the Nationwide Building Society will showU.K. house prices in October rose from the previous month.

Initial jobless claims in the U.S. for the week ended Oct. 27were 370,000, according to the median of 49 estimates in aBloomberg survey.

The People's Bank of China has paused from monetary easing aftercutting interest rates in June and July amid concern that furtherrelaxing policy will lead to rebounds in inflation and propertyprices. Mirae's Yang estimates consumer-price gains will accelerateto about 3 percent by the end of the year from 1.9 percent inSeptember.

Industrial-production growth accelerated for the first time infour months in September, retail sales rose at the fastest pacesince March and fixed-asset investment expansion quickened.

“Macro data will continue to surprise on the upside in comingmonths as the government continues to ease policy through theperiod of leadership transition,” said Zhang Zhiwei, chief Chinaeconomist at Nomura in Hong Kong.

Gains in industrial output will be faster this quarter than inthe previous three months and help the nation achieve its 7.5percent target for economic expansion in 2012, Zhu Hongren,spokesman at the industry ministry, said at a briefing on Oct.25.

Industrial companies' profits rose in September for the firsttime in six months, a statistics bureau report showed on Oct. 27, asign that pressures on corporate earnings are easing.

CSR Corp., China's biggest trainmaker by market value, on Oct.25 reported a 21 percent increase in third-quarter profit as risingdomestic spending on railways and lower borrowing costs boostedincome.

Bloomberg News

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.