By Koh Gui Qing, Jonathan Cable and Rodrigo Campos
BEIJING/LONDON/NEW YORK (Reuters) - Manufacturing activity in China and most of Asia gathered pace in July, while expansion slowed in Europe but remained healthy in the United States.
Measured by manufacturing purchasing managers' indices (PMIs) published on Friday, economic stimulus measures are gaining traction in China, the world's second-largest economy.
China's official manufacturing purchasing managers' index rose to 51.7 in July, the strongest since April 2012, up from 51 in June. The HSBC/Markit PMI also rose to 51.7, an 18-month peak. A reading above 50 on a PMI index separates growth from contraction.
Export orders flooded factories in China, according to the latest reports, pointing to better economic growth than the 7.5 percent seen in the second quarter.
"Taken literally, these PMIs signal an exceptionally strong start for third-quarter growth in China," said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore.
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Elsewhere in Asia, India's factory activity expanded at its fastest pace in 17 months in July, while Taiwanese manufacturers reported a robust improvement in overall business conditions on rising export demand. South Korea also reported exports to the United States expanded by over 19 percent in July.
EUROZONE ACTIVITY SLUGGISH
A comparable survey of manufacturing in the euro zone, however, disappointed, with the regional PMI at 51.8, matching June's reading, underscoring the fragility of European economic growth.
While manufacturing growth picked up in Germany, Europe's biggest economy, the French PMI fell to a seven-month low and there was a renewed downturn in Greece, alongside slowing growth in Spain and Italy.
"There are clear disparities between Europe and Asia in the PMIs but ... exports should pick up reasonably well globally and the euro zone's largest economy, Germany, should benefit from it," Commerzbank economist Peter Dixon said.
British manufacturing grew at its slowest pace in a year in July, possibly reflecting the prospect of higher interest rates and the impact of conflict in Ukraine, a survey showed on Friday.
The Markit/CIPS UK Manufacturing Purchasing Managers' Index fell to 55.4 from 57.2 in June, its lowest level since July 2013. Markit said the index was still well above its long-term average.
U.S. MANUFACTURING HEALTHY
The U.S. manufacturing sector expanded in July at a slower pace, according to private data vendor Markit. But the sector expanded at the fastest pace in more than three years, according to an alternative reading by the Institute for Supply Management (ISM).
The Markit U.S. manufacturing PMI slipped to 55.8 in July, down from the 57.3 June reading that was the highest since May 2010. The last reading below 50 came in September 2009.
"Although the pace of growth of manufacturing output slowed in July, it remained close to June's four year high," said Chris Williamson, chief economist at Markit.
"The goods-producing sector is therefore on course to provide a significant boost to (gross domestic product) in the third quarter, building on the 4.0 percent annualized growth surge seen in the second quarter."
However, ISM said its index of U.S. national factory activity rose to 57.1 in July, the highest since April 2011, from 55.3 in June.
The employment component jumped to 58.2 in July from 52.8 the previous month, hitting its highest since June 2011 and handily beating the expected 53 mark. New orders rose to 63.4 from 58.9.
In Canada, manufacturing activity picked up to its best level in eight months in July. The RBC Canadian Manufacturing Purchasing Managers' index rose to a seasonally adjusted 54.3 last month from 53.5 in June, the highest level since last November.
"Canada's manufacturers kicked off the second half of 2014 on stronger footing, clearly benefiting from improving global economic activity - it's encouraging to see the momentum," said Paul Ferley, assistant chief economist at RBC.
"With the U.S. economy pushing ahead, we expect this trend to continue."
LATIN AMERICA DISAPPOINTING
The news was not as good in Latin America.
Brazil's manufacturing activity dropped for a fourth straight month in July as soccer's World Cup reduced the number of working days and put further pressure on an already fragile sector.
The HSBC Purchasing Managers' Index for the Brazilian manufacturing sector fell to a seasonally adjusted 49.1 in July from 48.7 in June.
"While the data is consistent with the slowdown of the economy as a whole, it also reflects disruptions caused by the World Cup in June and July," said Andre Loes, chief Brazil economist at HSBC, in a note.
Mexico's manufacturing sector expansion slipped in July to a nine-month low.
The HSBC Mexico Manufacturing Purchasing Managers' Index ticked down to 51.5 in July from 51.8 in June. July's reading was the lowest since October.
Mexico exports mostly manufactured goods and sends nearly 80 percent of its exports to the United States. Mexico's economy posted weak growth in the first quarter after a harsh winter in the United States and new taxes hit demand.
(Reporting by Sumanta Dey, Wayne Cole, Koh Gui Qing, Jonathan Cable and Rodrigo Campos; Editing by Clive McKeef and Dan Grebler)