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China Q1 GDP, inflation data in focus as world gauges slowdown

China's first-quarter gross domestic product (GDP) will take center-stage today, as markets look for signs the world's second-largest economy is comfortably shifting away from its manufacturing roots.

Experts predict growth, expected at 10 a.m. SIN/HK, to have moderately eased in the first quarter of 2016; economists polled by Reuters estimated the economy expanded by 6.7 percent on-year, compared to a 6.8 percent reading in the December quarter.

China is also due to release industrial production, retail sales and fixed asset investment data for March on Friday.

Bank of America Merrill Lynch economists said in a recent report that they expected modestly slower growth in both secondary and tertiary sectors. The bank said strong year-on-year increase in home sales meant "real estate growth will likely rebound notably in 1Q from 4Q, largely offsetting lower growth in other service categories."

Peter Donisanu, global research analyst at the Wells Fargo Investment Institute, said in a Friday note that the institute expected to a Q1 on-year growth rate below the previous quarter's 6.8 percent.

He noted that production measures softened during the first quarter, with exports and imports both lower on-year in January and February and industrial production also slowing, while official manufacturing PMI continued its slide into contractionary territory to a four-year low of 49 in February.

"Nonetheless, we expect slower, but positive, growth in China during the first quarter, with support likely to come from a moderately positive expansion of the country's "new" economy tertiary (services) industries, which should continue through this year," Donisanu wrote.

A negative surprise in the form of growth below 6.5 percent on-year "could reignite market worries about global growth and lead to heightened market volatility," he added.

A series of "solid numbers," however, could provide further short-term upside for commodities, Angus Nicholson, market analyst at IG, said in a note on Friday.

Last month, at the National People's Congress (NPC), an annual meeting of parliament, Chinese leaders targeted 6.5 to 7 percent growththis year and identified supply-side policies as a crucial lever to revive growth and arrest excess capacity.

China's economic growth rate slowed to a 25-year low of 6.9 percent in 2015.

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