UPDATE 2-South Korea Oct exports rebound, recovery seen slow

* Oct exports +1.2 pct y/y (Reuters poll: +0.5 pct

* Oct mfg PMI up but index of new export orders dips -survey

* S.Korea first trade powerhouse to publish Oct data

* Oct inflation ticks up but stays below c.bank target

(Updates with details, deputy minister)

SEOUL, Nov 1 (Reuters) - Exports by trade powerhouse South Korea posted their first annual gain in four months in October, adding to hopes for a turnaround in an economy grappling with a year-long global trade slump.

Stronger demand from China and Europe led the small but meaningful 1.2 percent gain in exports last month on an annual basis, data from the Ministry of Knowledge Economy showed on Thursday, but doubts remained about a more sustained recovery.

A private survey showed separately on Thursday the country's manufacturing sector shrank in October for a fifth consecutive month, although at a slower pace than in September, as new export orders failed to break a months-long decline.

A deputy economy minister said the recovering trend would continue for the remainder of the year, but analysts, while agreeing that the worst was past, said it would take a while longer before the global economy stages a firm rebound.

``The third quarter was the bottom (for the South Korean economy) for sure, but this 'bottom' will likely stretch out,'' said Park Hyung-jung, an economist at Meritz Securities.


Exports to China rose 5.7 percent in October from a year earlier and those to the European Union gained 2.0 percent, whereas sales to the United States dipped 3.5 percent. The three top markets account for 44 percent of South Korean exports.

South Korea is home to some of the world's top suppliers of cars, ships and smartphones, and its October trade figures, the first from a major exporting economy, suggested global demand was on the mend after a slowdown of several months.

The median forecast from a Reuters survey of 19 analysts was for exports to grow 0.5 percent in October on an annual basis, but their projections ranged widely from a fall of 3.4 percent to a gain of 7.1 percent.

Markit Economics said in a statement the HSBC/Markit purchasing managers' index on South Korea's manufacturing sector edged up to a seasonally adjusted 47.37 in October from a 43-month low of 45.71 in September.

But underscoring the tentativeness of this phase in the trade cycle, the sub-index on new export orders fell to a 10-month low of 46.99 in October on a seasonally adjusted basis from 48.64 in September, showing that global demand remains weak.

A reading below 50 means contraction in the manufacturing sector activity, particularly new orders won by exporters during the month.

South Korean exports started weakening in late 2011 and had suffered annual losses in all but two months this year until September as ship deliveries collapsed and electronics goods makers failed to find more buyers.

The country's quarterly economic growth barely averted contracting in the July-September period as a collapse in corporate investment offset healthy growth in consumer spending, central bank data showed last week.

South Korea's annual inflation in October edged up to 2.1 percent from 2.0 percent in September, government data showed early on Thursday, roughly in line with market's consensus forecast but staying below the central bank's 3 percent target.

(Additional reporting by Christine Kim; Editing by Choonsik Yoo and Eric Meijer)