By Keiko Ujikane and Shamim Adam April 1 (Bloomberg) -- Chinese manufacturing increased for a 13th month and business sentiment in Japan rose to the highest level since the 2008 collapse of Lehman Brothers Holdings Inc. as Asia leads the global economic recovery. In other signs of the region’s strength, Indian factory output grew for the 12th consecutive month and Australian imports of machinery and industrial equipment soared 23 percent to a 10-month high. South Korean exports jumped 35.1 percent. Asian stocks advanced and the dollar weakened as signs of stronger growth in the region added to investor optimism that the global economy is picking up speed. Manufacturing in the U.S. probably also increased at a faster pace in March, economists said before a report today. “We are seeing signs of a more sustained improvement in manufacturing and demand for goods both from domestic Asian markets and international markets,” said Enrico Tanuwidjaja, a regional economist at OSK-DMG group in Singapore. “We are confident the momentum will continue in the first half and will hopefully extend into the second half. The economic indicators show Asia continues to lead the world in the recovery.” The MSCI Asia Pacific Index climbed 0.8 percent to 126.19 at 3:22 p.m. in Tokyo, after the measure advanced for four straight quarters. The dollar traded at $1.3508 per euro from $1.3510 in New York yesterday. Demand from China’s accelerating economy is helping drive manufacturing and exports across Asia as the region leads the global economy out of the worst recession since World War II. China, Japan China’s Purchasing Managers’ Index rose to a seasonally adjusted 55.1 from 52 in February, according to Li & Fung Group, a Hong Kong-based company that releases data for the Federation of Logistics and Purchasing and the Beijing-based National Bureau of Statistics. Readings above 50 indicate expansion. A separate China manufacturing PMI released today by HSBC Holdings Plc and Markit Economics also increased, to 57 in March from 55.8 the previous month. China’s economic growth accelerated to 10.7 percent in the fourth quarter, the fastest pace since 2007, on stimulus spending and record lending of 9.59 trillion yuan ($1.4 trillion) last year. The first quarter result is due on April 15. Japan’s central bank today reported that the nation’s large manufacturers became the least pessimistic since 2008 in March. The Tankan index rose to minus 14, still indicating more pessimists than optimists, as an economic recovery has yet to put an end to deflation. Exports, Investment “Exports have been stronger than we initially expected,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo “So that’s helped the economy continue its recovery with momentum.” Asian demand is spurring earnings for Japanese exporters including Renesas Electronics Corp. and prompting others such as Toshiba Corp. to invest again. Toshiba, Japan’s biggest memory-chip maker, will start building a flash-memory plant in July, reviving a plan to expand output capacity that was shelved during the recession. India’s Purchasing Managers’ Index declined to 57.8 last month from 58.5 in February, according to an e-mailed statement from HSBC Holdings Plc and Markit Economics. Still, the index has remained above 50 for a year. “The biggest danger to Indian economic growth in the coming months will be an inability to meet demand due to a lack of capacity,” Robert Prior-Wandesforde, an economist at HSBC Holdings Plc in Singapore, said in today’s report Global Demand In northern Asia, South Korea’s exports rose faster than economists expected in March as a recovering global economy boosted demand for semiconductors, cars and petrochemicals. Overseas shipments advanced to $37.68 billion, the Ministry of Knowledge Economy said in Gwacheon today. The median of 15 estimates in a Bloomberg News survey was for a 31.7 percent gain. In Australia, imports rose and the trade deficit widened more than economists expected in February as miners bought from overseas more of the equipment needed to meet surging Chinese demand for commodities. Contract iron ore prices may increase 65 percent this year amid stronger-than-expected demand from Chinese steel mills, JPMorgan Chase & Co. said this month. “The economy is benefiting from China’s V-shaped recovery,” said Paul Brennan, an economist at Citigroup Inc. in Sydney. “The rapid V-shaped recovery in Asia is boosting commodity prices.” Manufacturing is also showing signs of recovery in the U.S., according to economists. The Institute for Supply Management’s U.S. factory index rose to 57 from 56.5, according to the median estimate in a Bloomberg News survey of 77 economists. Readings greater than 50 signal expansion. Other reports may show fewer Americans filed claims for jobless benefits and construction dropped. To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.netShamim Adam in Singapore at sadam2@bloomberg.net

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