China's manufacturing activity at three-month low: HSBC

China's manufacturing expanded at a slower pace in August, a sign of weak momentum in its ongoing economic recovery.

The HSBC/Markit China flash manufacturing PMI for August dipped to 50.3 from a final reading of 51.7 in July, making the lowest rate in three months as both output and new orders slowed, according to HSBC's preliminary purchasing manager's index (PMI), released on Thursday.

PMI above 50 percent indicates expansion and below 50 percent suggests contraction.

"The data suggests that the economic recovery is still continuing but its momentum has slowed again," noted HSBC chief China economist Qu Hongbin.

After a shaky start this year, Chinese policymakers have pinned hopes on accelerating investment on railways and infrastructure, quickening fiscal spending, and selectively easing monetary policies to support faltering growth.

Helped by these efforts, China's economic growth showed more recovery signs in the second quarter, with growth accelerating to 7.5 percent from the 7.4-percent expansion in the first.

But as the latest data pointed to still weaker recovery rates, Qu said more policy support is needed to help consolidate the trend.

"Both monetary and fiscal policy should remain accommodative until there is a more sustained rebound in economic activity," he said in a research note.

Reacting to the news, Chinese stocks headed downward in the morning session, with both the Shanghai and Shenzhen Component Index experiencing loss.