* CPI up 3.4 pct on year; forecast +3.3 pct
* PPI down 0.7 pct on year; forecast -0.5 pct
* Industrial output at 0530 GMT, seen up 12 pct on year
* Retail sales seen up 15.2 pct on year
By Lucy Hornby
BEIJING, May 11 China's annual consumer inflation moderated in April despite strong food price rises, data on Friday showed, potentially giving Beijing more scope to loosen policy to help the economy rebound from a first-quarter slowdown in growth.
The data comes ahead of the monthly industrial production report due at 0530 GMT, which will be closely watched after disappointing trade numbers on Thursday heightened jitters about a slowdown in the global economy.
"This confirms that inflation is trending down and that the policy focus will remain on promoting growth," Zhang Zhiwei, China economist at Nomura in Hong Kong.
"The weak export data yesterday put more pressure on the government. This really doesn't change the market outlook on inflation that much, but probably policy loosening will become more likely going forward."
The April consumer price index (CPI) rose 3.4 percent year-on-year, a touch above the 3.3 percent rise forecast in a Reuters poll but down from the 3.6 percent pace logged in March.
Food inflation - which is of most concern for China's people and policymakers - also showed signs of moderating, although it is still comfortably outpacing other prices.
April food inflation came in at 7.0 percent, below the 7.6 percent forecast and down from 7.5 percent in March, as falling pork and fruit prices offset an increase in vegetable prices.
China's inflation has fallen steadily from a three-year peak of 6.5 percent in July 2011 in response to a series of policy tightening steps and weakening economic activity.
Retreating inflation has led investors to speculate that China may cut further the amount of cash it requires banks to hold as reserves to encourage them to lend more to cash-strapped firms.
China has cut the required reserve ratio by 100 basis points from a record high of 21.5 percent in two steps, the last a 50 bp cut in February. The market consensus is for 150 bps of more RRR cuts this year, according to the benchmark Reuters poll.
Trade data on Thursday highlighted the risks to China's factory-focused economy of a fresh downturn in demand, with annual export growth of just 4.9 percent in April, below a forecast of 8.5 percent, while headline import growth stalled.
There is likely to be better news for China bulls later on Friday, with more data expected to show an uptick in April industrial production compared with March as factories move out of a trough in the cycle.
Annual industrial production growth is forecast to hit 12 percent, a Reuters poll showed, up from 11.9 percent in March.
"I think growth should accelerate and if it does Thursday's trade data will become less important to the market," said Darius Kowalcyzk, economist at Credit Agricole-CIB in Shanghai.
But slightly stronger production by China's manufacturers belies continued softness in domestic demand, exacerbated by the impact of financial turmoil in Europe, a major export market.
Steel mills were producing flat-out in April, as they competed to maintain market share despite falling profits.
High domestic stockpiles of metals and iron ore made it unprofitable to import more, helping explain a mere 0.3 percent rise in China's imports in April, far short of the 11 percent growth that had been forecast.
Fixed asset investment data for April is also due later, with analysts polled by Reuters expecting a steady pace of growth.
Other than pockets of government spending, overall investment is relatively soft, weighing on demand for steel for construction as well as household appliance purchases, said steel analyst Zhou Xizheng of CITIC Securities in Beijing.
"It's mostly because consumer confidence is weak," he said. "Investment is weak because no-one wants to take on more debt."
April retail sales growth is expected to be unchanged from March, at 15.2 percent.