China's factory activity surprisingly expanded in March, government data showed on Wednesday, but analysts are still betting on more easing measures to come, to prevent growth from slipping further.
The official Purchasing Managers' Index (PMI), the bellwether of large industrial firms, rose to 50.1 in March from February's 49.9, a touch above the 50-mark that that separates growth from contraction. A Reuters forecast had expected a figure of 49.8.
The reading was better than the March HSBC final PMI, also released Wednesday, which showed the nation's vast manufacturing sector in contraction. The 49.6 final print, however, is stronger than the preliminary figure of 49.2.
The Australian dollar snapped six sessions of declines against the dollar on the news, climbing to a high of $0.7664, from $0.7612. The Shanghai Composite traded 0.8 percent higher by mid-morning, while the Hang Seng rose 0.5 percent.
"After a string of disappointing data, the improvement in the official PMI is welcome news and suggests that the recent rate cuts and pick-up in bank lending growth may be helping to support large firms," Julian Evans-Pritchard, China economist with Capital Economics, wrote in a note.
"That said, growth is still likely to have slowed sharply last quarter and we expect more policy support measures, including further rate cuts and required reserve ratio reductions, as the government moves to avoid missing its annual growth target," he added.