* China Apr activity data suggests slowing in economic momentum
* Industrial output, trade only bright spots
* China says no impact on economy yet from Sino-US trade row
* Investment, retail sales growth slower than expected
* But industrial output beats forecasts on auto, steel surge (Adds detail, comment from economist)
BEIJING, May 15 (Reuters) - China reported weaker-than-expected investment and retail sales in April and a drop in home sales, clouding its economic outlook even as policymakers try to navigate debt risks and defuse a heated trade row with the United States.
Fixed asset investment grew the slowest since 1999 and the pace of retail sales softened to a four-month low, suggesting a long-anticipated slowdown in the world's second-largest economy may finally be setting in even as trade protectionism is on the rise.
The lone bright spot on Tuesday's activity data was industrial output, which jumped more than expected as automobile and steel production surged.
"Industrial activity was buoyed by the easing of pollution controls (imposed over the winter). But there are signs in the rest of todays data that the economy is losing momentum," Capital Economics senior China Economist Julian Evans-Pritchard wrote in a note following the data.
"Domestic spending is likely to continue to soften given the headwinds from slowing credit creation," he said, adding that the rebound in industry may be short-lived once companies rebuild inventories which were depleted in recent months.
Capital Economics has long predicted China will loosen policy later this year to keep growth from slowing too sharply.
Industrial output rose 7.0 percent in April, the National Bureau of Statistics said, beating forecasts for a rise of 6.3 percent and up from a seven-month low of 6.0 percent in March.
NO TRADE HIT YET
Sino-U.S. trade frictions have yet to show an impact on China's economy, the statistics bureau said.
But while April exports and imports were surprisingly solid, business surveys point to a sharp weakening in export order growth, possibly as companies grow worried about being stuck with high inventories if the U.S. and China start imposing tit-for-tat tariffs.
Analysts also suspect some firms may be rushing out shipments to beat any punitive trade measures, flattering the recent export figures.
Washington and Beijing will resume trade negotiations this week, after initial talks earlier this month appeared to make little progress in narrowing their differences.
SLOWING INVESTMENT SUGGESTS SOFTENING DEMAND
Investment growth slowed pretty much across the board, adding to views that rising borrowing costs -- a byproduct of a regulatory crackdown on riskier lending -- are finally starting to drag on activity.
Fixed-asset investment growth slowed to 7.0 percent in January-April from a year earlier, versus forecasts of only a slight dip to 7.4 percent.
Private sector investment growth cooled to 8.4 percent, from 8.9 percent in the first three months. Private investment accounts for about 60 percent of overall investment in China and has rebounded this year as spending by heavily-indebted state firms slows.
Growth in infrastructure spending, a powerful economic driver last year, slowed to 12.4 percent in the first four months.
Economists expect that trend to continue as Beijing forces local governments to scale back investment projects to contain their debt, and as home sales cool due to strict government controls to fight speculation and tame home prices.
China's property market, another key growth driver, is also showing signs of fatigue as mortgage rates rise.
Real estate investment rose 10.2 percent in April on-year, slowing from a 10.8 percent rise in March, according to Reuters calculation based on the official data.
Property sales by floor area fell 4.1 percent in April compared with a 3.2 percent rise in March.
For the first four months of the year, sales grew just 1.3 percent on-year, down from 3.6 percent in the first quarter.
The property slowdown is already weighing on consumption, filtering through to weaker demand for related items from home appliances to furniture.
Retail sales growth slowed to 9.4 percent in April, missing forecasts for a gain of 10.0 percent and well off March's pace of 10.1 percent.
While China's official data suggests economic growth has been remarkably steady at 6.8-6.9 percent over the past year, economists have stuck to their forecasts that it will start to lose steam in coming months, even without any trade shocks.
A few China watchers believe activity has already slackened significantly, although they are in the minority.
UK-based Fathom Consulting's momentum gauge ended the first quarter at 5.9 percent, while Capital Economics reckons growth slowed to 4.8 percent at the start of 2018 as policy tightened.
With trade frictions rising with the United States, there are signs that Beijing is already moving pre-emptively to a more supportive policy stance to ensure growth doesn't slow too much.
The politburo, a top decision-making body of the Communist Party, said in April China will strive hard to achieve 2018 economic targets and will boost domestic demand.
China's central bank last month unexpectedly cut reserve requirement ratios (RRR) for most banks hours after soft March data, a move that was earlier and more aggressive than expected.
While the central bank insists it has not shifted its "neutral" policy stance, economists believe further RRR cuts are likely in coming months as policymakers look to offset the impact on companies from higher financing costs and any trade damage.
The weighted average lending rate for non-financial firms, a key indicator reflecting corporate funding costs, rose 22 basis points in the first quarter to 5.96 percent, the People's Bank of China said in its quarterly report on Friday.
(Reporting by Kevin Yao and Cheng Fang; Writing by Elias Glenn; Editing by Kim Coghill)