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Macroeconomic indicators - China factory activity picks up and export orders recover

Reuters reported that China factory activity picked up in September for a second month in a row and export orders strengthened, offering some reassurance that the world second-largest economy can weather the global economic turmoil.

The official purchasing managers index showed inflation pressures eased slightly but probably not enough for Beijing to relax in its battle against soaring prices. China PMI inched up to 51.2 from August 50.9 largely in line with a median forecast of 51.3 in a Reuters poll.

The new export orders index rebounded to 50.9 from 48.3 in August which was a 28 month low. The 50 point mark is the dividing line between expansion and contraction.

China is by no means immune to slowdowns in the United States and Europe, its two biggest export markets. However, strong domestic demand and solid Asian export growth have provided some insulation.

Still investors have grown increasingly concerned that China economy may slow more sharply than anticipated. Beijing has tried to orchestrate a modest cool down to help curb inflation, but a deepening debt crisis in Europe threatens to trigger a recession there which could trip up global growth.

Mr Alistair Thornton an economist at IHS Global Insight in Beijing said "September PMI should provide some support to global investor confidence, if only at the margin."

He said that "However, this does little to clarify policy stance, with authorities still eyeing the situation in Europe and the United States for their cue to loosen."

The People Bank of China reaffirmed on Friday that it would keep monetary conditions tight in its effort to rein in stubborn inflation, adding that containing domestic price pressure remains its top priority.