SEOUL, South Korea — Asian stock markets were higher Monday as investors bet that China would introduce economic stimulus measures after manufacturing declined further in March.

The preliminary version of HSBCs purchasing managers index for China dropped to 48.1 in March from Februarys 48.5. Readings below 50 on the 100-point scale indicate a contraction in activity. Factory output shrank at the fastest clip in 18 months.

The worse-than-expected result suggested that the slowdown in the worlds No. 2 economy is deepening, J.P. Morgans chief China economist Haibin Zhu said in a report.

Beijing will likely introduce a series of pro-growth measures focusing on accelerating fiscal spending on infrastructure and reforms, the report said.

Tokyos Nikkei 225, the regional heavyweight, rose 1.8 per cent to 14,475.30 after a three-day long weekend. Hong Kongs Hang Seng gained 1.8 per cent to 21,812.49 and Chinas Shanghai Composite Index widened gains after the release of the manufacturing survey, rising 1.1 per cent to 2,070.20.

South Koreas Kospi added 0.6 per cent to 1,945.55 and Australias SP/ASX 200 bounced back, trading 0.2 per cent higher at 5,346.90. Markets in Southeast Asia also rose.

The survey also had a bright spot that for investors may have outweighed the signs of weakness in Chinas domestic economy. It showed that new orders from overseas export customers rose, spelling a recovery in overseas demand.

Wall Street retreated Friday. The SP 500 slipped 5.49 points, or 0.3 per cent, to close at 1,866.52. The Dow Jones industrial average lost 28.28 points, or 0.2 per cent, to 16,302.70. The Nasdaq composite dropped 42.50 points, or 1 per cent, to 4,276.79.

Benchmark crude oil for May delivery was down 14 cents to $99.32 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 56 cents to settle at $99.46 on Friday.

In currencies, the euro rose to $1.3803 from $1.3794 late Friday. The dollar rose to 102.45 yen from 102.26 yen.