Chinese manufacturing gauge rebounds in March after stimulus

BEIJING (Bloomberg) - A Chinese manufacturing gauge rebounded in March, suggesting stimulus efforts have started to bolster factories in the world's second-largest economy.

The government's manufacturing Purchasing Managers' Index (PMI) was 50.1 last month, from 49.9 in February, according to the statistics bureau and the China Federation of Logistics and Purchasing in Beijing. Numbers above 50 signal expansion.

Premier Li Keqiang last month said policy makers will step in to support the economy if growth slows too sharply, while central bank Governor Zhou Xiaochuan flagged room to act. Wednesday's reading suggests China's factories, marred by deflation and overcapacity, may be starting to pick up after two interest rate cuts in the last six months and robust U.S. demand.

The official gauge contrasts with the preliminary PMI from HSBC and Markit Economics, which fell to an 11- month low. The final reading of that gauge is due later Wednesday.

At a forum on Sunday, People's Bank of China Governor Zhou said the nation's growth rate has tumbled "a bit" too much and that policy makers have scope to respond. On Monday, the PBOC cut the required down payment for some second homes.

Policymakers are juggling the need to keep growth from slipping too far with plans to press ahead with reforms. China on Tuesday said an insurance system for bank deposits will start on May 1, a step toward scrapping remaining controls on interest rates and allowing lenders to fail in a more market-driven economy.