By Simone Meier April 1 (Bloomberg) -- China’s manufacturing expanded for a 13th month, business sentiment in Japan rose to the highest since 2008 and factories in Britain and the euro region stepped up output as the global economic recovery strengthened. China’s Purchasing Managers’ Index rose to a seasonally adjusted 55.1 in March from 52 the previous month, Hong Kong- based Li & Fung Group said today. In Japan, the Tankan index of sentiment increased to minus 14 in March from minus 25 in December, while Europe’s manufacturing industry expanded at the fastest pace in more than three years. An index of U.K. manufacturing activity rose to a 15-year high. Surging economic growth in China is pulling the global economy out of its worst slump in more than six decades and benefiting companies from Honeywell International Inc. in the U.S. to Germany’s Bayerische Motoren Werke AG. Stocks around the world rallied on today’s data. In the U.S., the world’s largest economy, manufacturing probably expanded last month at the fastest pace since 2005. “It seems the epicenter of the global manufacturing cycle is in Asia,” said Ken Wattret, chief euro-area economist at BNP Paribas SA in London. “The sector is going strong, but what we see is a rebound from exceptional declines. The momentum is there, but we still have a long way to go.” The MSCI Asia Pacific Index climbed 1 percent to 126.35 at 5:18 p.m. in Tokyo. The Stoxx Europe 600 increased 0.9 percent to 265.94, an 18-month high, at 9:18 a.m. in London, while futures on the Standard & Poor’s 500 Index rose 0.5 percent. Global Economy The International Monetary Fund forecasts that the global economy will grow 3.9 percent this year after a 0.8 percent contraction in 2009 with China expanding 10 percent, almost five times the pace expected for the U.S. The euro area economy may expand 1 percent, the IMF forecast in January. In China, the acceleration may buttress the case for Premier Wen Jiabao’s government to consider allowing gains in the yuan for the first time since mid-2008 and raising interest rates. Central bank Governor Zhou Xiaochuan said last month that “sooner or later” China will end the contingency measures it adopted during the global recession. “Risks of overheating are still building despite the government’s cooling measures,” said Xing Ziqiang, a Beijing- based economist at China International Capital Corp. Xing anticipates the government will let the yuan appreciate as early as this month and raise rates in June. Export-Led Recovery For now, economies are benefiting from the export-led recovery. In Switzerland, a measure of manufacturing activity jumped last month to the highest in more than three years, while Ireland’s manufacturing industry grew for the first time since 2007. In the U.S., the Institute for Supply Management’s factory index, which will be released later today, probably rose to 57 in March from 56.5 in the prior month, according to the median estimate in a Bloomberg survey of 77 economists. Other reports may show fewer Americans filed claims for jobless benefits and construction dropped. “The expansion we’re seeing is largely an export story,” said David Tinsley, an economist at National Australia Bank in London. “So, even now you’ve got very robust rates of growth according to these PMI indices, it’s just covering some of the level lost. It’s not forging a new growth trajectory.” To contact the reporter on this story: Simone Meier in Dublin at smeier@bloombert.net.

Source