GLOBAL ECONOMY-Japan takes turn for worse,Europe resists-surveys

By Yoko Nishikawa and Brian Love

TOKYO/PARIS, April 1 (Reuters) - Japan's economic prospects took a turn for the worse in March while China and Europe weathered the gloom caused by the U.S. downturn and financial market turmoil better, according to industry surveys.

In Europe, the north-south divide widened as Italy and Spain reported outright contraction in manufacturing in sharp contrast to an acceleration of growth in Germany, and solid if less racy performances in France and Britain.

Most of the information came from business surveys used to produce Purchasing Managers' Indices, monthly measures regarded by many economists as the closest there is to real-time health checks in manufacturing and in services.

A similar report from the United States was due at 1400 GMT and expected to reveal continued contraction. All of that would reinforce the picture of a U.S.-led slowdown that damages global economic growth but less so, so far at least, in robust emerging market economies such as China, and in Europe too.

ASIA'S TWO FACES

In Asia, Japan's PMI index of manufacturing activity slid below 50 in March, signalling shrinking activity.

The drop -- to 49.5 from a barely expansionary 50.8 the previous month -- was just part of the bad news from a heavily export-dependent economy which appears to have run out of steam.

Business sentiment in Japan sank to its lowest in four years because of concern about the financial market turmoil, raw materials costs, faltering share prices and a rise in the yen's exchange rate, another survey by the central bank showed.

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For China, the story was markedly better. The PMI readout on manufacturing in March rose to its highest in almost a year due to a surge in output and new orders.

One PMI index -- there are two in China -- compiled on behalf of the National Bureau of Statistics rose to 58.4 in March, its highest since April 2007, from 53.4 in February.

The other from brokerage CLSA rose to 54.4, a five-month high, from 52.8 in February. Output, new orders and purchasing all posted their strongest gains since October.

In India, an equivalent index showed growth in manufacturing slowed to its weakest rate since last July but that still left the index at a healthy expansionary level many industrialised would envy -- 57.5.

In PMI surveys, 50 is the watershed above which the industry is considered to be expanding, and figures closer to 60 are seen as signs of very healthy expansion.