UPDATE 1-Komatsu says China demand picking up steam

* Komatsu to start output of hybrid excavators in China

* Hydraulic excavator sales in China up 75 pct yr/yr in Sept

* Growth accelerating from 60 pct unit sales rise in August

* Demand boosted by China government stimulus spending

HIRATSUKA, Japan, Oct 2 (Reuters) - Komatsu Ltd (6301.T), the world's second-biggest maker of earth-moving machines, said unit sales of hydraulic excavators jumped 75 percent in China last month, boosted by the government's massive stimulus package.

The September sales surge in China followed a rise of about 60 percent in August, the company said.

Komatsu, which competes with industry leader Caterpillar (CAT.N), also said it would start producing hybrid excavators in China this month, with an estimated output of 2,000-2,500 units in the financial year to March 2011.

"Growth in China is accelerating," Kunio Noji, Komatsu's chief executive officer, told reporters.

Komatsu's sales in China have been boosted by the government's $585 billion spending programme, which has focused in large part on infrastructure projects that require excavators and other earth-moving machines.

Growth in China has helped Komatsu make up for sluggish demand in the North American and European markets. (Reporting by Yuko Inoue; Editing by Hugh Lawson)