A Chinese manufacturing index indicated a worse contraction this month, bolstering the case for Premier Wen Jiabao to add measures to sustain growth even as he prolongs a campaign to cool property prices. The preliminary 48.1 reading in a purchasing managers’ index from HSBC Holdings Plc and Markit Economics today is the lowest since November and compares with a final 49.6 in February. A result below 50 indicates a contraction.Asian stocks pared gains and oil and copper fell as the report added to concerns about a deeper slowdown in the world’s second-biggest economy. Wen this month pledged pre-emptive fine- tuning of fiscal and monetary policies to support growth after increases in gross domestic product slowed in 2011. “Growth momentum could slow down further amid a combination of sluggish export new orders and softening domestic demand, and this calls for further easing steps,” saidQu Hongbin, Hong Kong-based chief economist for China at HSBC. The MSCI Asia Pacific Index of stocks was up 0.4 percent at 11:45 a.m. Tokyo time after climbing as much as 0.8 percent. The Shanghai Composite Index extended losses, dropping 0.4 percent at 11:15 a.m. local time. The reading points to a fifth straight monthly contraction, the longest period since the global financial crisis, when the gauge stayed below 50 for eight months ending in March 2009. Odds of Reduction Goldman Sachs Group Inc. (GS) said in a research note after the report that the odds of an interest-rate reduction have “significantly increased recently.” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, is forecasting a system-wide reserve-requirement ratio cut this month or in early April following China’s decision yesterday to boost rural credit by cutting ratios for more branches of Agricultural Bank of China Ltd. (601288), the nation’s third-biggest lender by market value. China’s economy may bottom in the first to second quarter and the country has already passed through the tightest credit conditions in this cycle, Ba Shusong, a researcher at the Development Research Center of the State Council, said today in Shanghai. 400 Companies The preliminary reading, called the Flash PMI, is from 85 percent to 90 percent of responses to a survey of more than 400 companies. A separate PMI from China’s logistics federation and the National Bureau of Statistics, which has a different sample and methodology, showed an expansion for a third month in February. Joy Yang, chief China economist at Mirae Asset Securities (HK) Ltd., said the HSBC survey is more concentrated on small- and medium-sized companies than the official measure, which has more large enterprises and thus more predictive power. Wen, in his annual state-of-the-nation address this month, pledged to complete more affordable homes and ensure funding for key investment projects while extending his campaign to cool property prices. China’s economic growth slowed throughout last year to 8.9 percent in the fourth quarter, prompting the central bank to add liquidity via open-market operations and reduce banks’ reserve requirements twice since November. The government last lowered benchmark interest rates in 2008. Confidence Improving Even so, confidence in China’s economy is recovering, according to two central bank surveys of bankers and company executives released this week. Respondents’ expectations improved for market demand and export orders, while more bankers said monetary policy will tend to be looser next quarter, the central bank said. The global economy is in better shape than three months ago even as vulnerabilities still need to be addressed, International Monetary Fund Managing Director Christine Lagarde said this week at a conference in New Delhi. At the same time, Lagarde said later at a press briefing that it shouldn’t be assumed the period of crisis is over. Improving prospects for China’s exports have prompted economists from Nomura Holdings Inc. and Deutsche Bank AG to raise their 2012 growth forecasts. Nomura increased its estimate to 8.2 percent from 7.9 percent and Deutsche Bank boosted its projection to 8.6 percent from 8.3 percent. Wen set a 7.5 percent growth target for 2012, lower than the 8 percent annual goal in place since 2005, as he aims to tilt the nation’s growth toward consumption from capital spending and exports. Sany Slowing Sany Group Co. (SANYIZ), owner of China’s biggest machinery maker, may see sales growth slow by about half to 25 percent this year as the economy decelerates, Xiang Wenbo, a board member and president of the company’s Shanghai-listed unit, said in Beijing March 10. “The industry’s extraordinary growth, brought about by the government’s stimulus package, is not sustainable,” said Xiang, whose company is based in Changsha, Hunan province. “Still, the Chinese market will be the best in the world,” he said.