* China May inflation picks up to 5.5 percent, 34-month high
* India May inflation accelerates to 9.06 percent
* Beijing raises bank reserve requirements further
* India interest rate increase expected on Thursday
* Price pressures mount even as economies show signs of cooling
By Tony Munroe and Kevin Yao
BEIJING/MUMBAI, June 14 (Reuters) - Inflation in China and India accelerated in May, prompting Beijing to lift bank reserve requirements on Tuesday and keeping pressure on India to raise interest rates later this week even as Asia's two big growth engines show signs of slowing and recovery stalls elsewhere.
China's consumer price inflation hit a 34-month high of 5.5 percent, keeping inflation-fighting at the top of the agenda for Beijing, which sees little chance of the current slowdown from last year's 10 percent-plus growth turning into a hard landing.
In India, wholesale price index inflation was well above forecasts at 9.06 percent, with a sharp rise in manufacturing inflation from the previous month offsetting a slowdown in the rise of food and fuel prices in Asia's third-largest economy, adding to the likelihood of a rate increase on Thursday.
Fast-growing economies such as Brazil, China and India face the potentially tricky task of managing rising inflation even as growth cools from last year's scorching levels and the U.S. recovery shows signs of losing steam, while Europe and Japan struggle.
Brazil raises its key interest rate last week for a fourth straight time and indicated more rate rises could be on the way soon.
Hours after the China inflation report, while many Asian financial markets were still trading, the Chinese central bank raised bank reserve requirements by 50 basis points to a record 21.5 percent, its sixth move this year, catching investors by surprise.
In past months, the People's Bank of China has often announced policy tightening measures when Asian markets were on closed, on holidays or long weekends.
"The rise is aimed mainly at curbing inflation," said Du Zhengzheng, an analyst at Bohai Securities in Beijing. "The move is likely to delay the next interest rate rise to the end of this month or the beginning of next month."
The raft of Chinese data released on Tuesday suggested the world's second-biggest economy was slowing, but not too quickly, leaving room for Beijing to focus on fighting inflation, analysts said.
By forcing banks to lock up cash which they would otherwise have loaned out, Beijing hopes it can drain excess money from its financial system and reduce inflationary pressures.
"We see more tightening going forward. We expect them to raise rates again before going on hold in the third quarter," said Allan Von Mehren, chief analyst at Danske Bank in Copenhagen.
"Today's inflation data was in line with what we had expected, but it was pushed up by high food prices, and we pretty much know that because of the base effect inflation will come down as we get into 2012," he said.
Producer prices in May rose 6.8 percent from a year earlier, above forecasts in a Reuters poll for a rise of 6.5 percent and possibly signalling that price pressures will persist well into summer as companies pass higher costs on to consumers.
China's May inflation reading was up from an annual 5.3 percent in April, and compared with forecasts for a 5.4 percent increase.
In addition to tightening bank reserve requirements, China's central bank has lifted interest rates four times since October to quell inflation. The one-year lending rate is 6.31 percent and one-year deposit rate is 3.25 percent.
In India, inflation continued to surprise on the upside even though the central bank has raised rates nine times since March 2010, and the economy's 7.8 percent growth in the three months through March lagged expectations and was its worst showing in five quarters.
Economists polled by Reuters had forecast May inflation of 8.7 percent. Headline inflation for March was revised up to 9.68 percent from an earlier reported 9.04 percent, continuing a recent trend of sharp upward revisions.
Fuel and food inflation, the usual culprits in India, slowed in May from April despite a mid-month gasoline price increase, but an expected hike in the price of regulated diesel and other fuels to offset high global crude prices would continue to add to upward price pressures.
Manufacturing inflation in India jumped to an annual 7.27 percent from 6.18 percent in April, adding to the expectations that the Reserve Bank of India will raise rates by 25 basis points on Thursday, its 10th increase since March 2010.
"The big surprise is mainly because of the sharp increase in manufacturing prices, which implies that core inflation is picking up. This cements the case for a 25 basis points rate hike on Thursday," said Nomura economist Sonal Varma.
Economists and policymakers have been cutting their growth outlooks for India in recent months after the economy grew 8.5 percent in the fiscal year that ended in March. Many private economists forecast growth this year at below 8 percent.
(Editing by Kim Coghill)