(This September 2 story was corrected to change expected PPI drop to 42nd straight month, not 41)
BEIJING (Reuters) - A flood of data from China in coming weeks is likely to point to further weakness in the world's second-largest economy, reinforcing expectations that Beijing needs to roll out fresh stimulus measures and keeping global financial markets on edge.
While industrial output may have picked up last month, China's exports and imports likely continued to shrink and growth in fixed-asset investment is languishing near multi-year lows, a Reuters poll showed.
New loans likely fell sharply from July, while manufacturers had to cut prices more deeply to win business.
The downbeat data will raise the chances that annual economic growth may dip below 7 percent in the third quarter for the first time since the global financial crisis, as demand weakens at home and abroad.
Fears that China may be at risk of a hard landing that would jeopardise the global economy have grown in recent weeks after a series of grim factory activity surveys.
The government is also still struggling to stabilise the yuan after its surprise devaluation of the currency on Aug. 11 and has been unable to halt a stock market rout that has seen the country's share indexes plunge 40 percent since mid-June.
Tao Wang, China economist at UBS in Hong Kong, said some August data may not seem as bad on the surface as those in July when compared with a year earlier but will still point to a loss of economic momentum over the summer.
"Meanwhile, shrinking stock market trading amid ongoing volatility has dampened the financial industry's contribution to GDP growth. As such, Q3 GDP growth looks set to fall below 7 percent."
China's exports were expected to drop 6.0 percent in August
compared with a year earlier, after dipping 8.3 percent in July,
a median forecast of 20 analysts polled by Reuters showed.
Imports likely shrank for a 10th straight month,
slipping 8.2 percent, following a drop of 8.1 percent in July,
reflecting both weak global commodity prices and persistently soft domestic demand.
Growth in fixed-asset investment, one of the major drivers of China's economy, was seen slowing to 11.1 percent in the
first eight months of the year from the same period in 2014, versus 11.2 percent in January-July - the weakest expansion in nearly 15 years.
Annual consumer inflation likely inched up to 1.8 percent in August from July's 1.6 percent, though the increase was driven mainly by soaring pork prices.
But broader deflationary pressures persisted. Manufacturers likely had to cut prices for the 41st month in a row, with a forecast 5.5 percent drop in the producer price index (PPI) the biggest since the global crisis.
Factory output was forecast to have grown 6.4 percent last
month from a year earlier, picking up slightly from 6.0 percent in July, but there is little sign of a turn-around in the face of sluggish demand and overcapacity.
Activity in China's factory sector shrank at its fastest rate in at least three years in August as domestic and export orders tumbled, surveys showed on Tuesday.
Similar business surveys showed growth was also slowing in the services sector, which has been the lone bright spot in the economy over the last year.
Annual retail sales growth was seen unchanged at 10.5
percent, despite some automakers' reports this week of sharply
lower sales.
Chinese banks may have extended 900 billion yuan ($141.44 billion) worth of new loans last month, down from a surprisingly robust 1.48 trillion yuan in July, which was propelled by Beijing's massive rescue package for the slumping stock market.
The broad measure of M2 money supply likely grew 13.2 percent, easing from July's 13.3 percent.
Beijing has announced a slew of stimulus moves since last year to avert a sharper slowdown, including five interest rate cuts since November and help for the ailing property market, and economists expect more support measures in coming months.
The government's growth target is 7 percent this year, down from 7.4 percent in 2014 and the slowest in a quarter of a century.
But some economists believe China's real growth rate is already much weaker than official data suggest.