PREVIEW-Brazil industry likely nudged up in March


* Industrial output in Brazil seen up 1.3 pct in March

* Weaker growth seen in Q2 on mounting inventories

* Data due Thursday, at 9 a.m. local time (1200 GMT

By Silvio Cascione

SAO PAULO, April 30 (Reuters) - Brazilian industry likely kept its sluggish recovery alive in March on the back of higher automobile output, though rising inventories suggest recent improvements may be short-lived, according to a Reuters poll of analysts on Monday,

Weak industrial output nearly dragged the economy into recession in late 2011, prompting Brazilian policymakers to react with deep interest rate cuts and steps to limit currency gains.

Industrial output likely increased 1.3 percent in March from the prior month, repeating February's pace of growth, according to the median view of 16 analysts polled by Reuters.

Compared to March 2011, industrial production likely grew 1.5 percent, up from the 3.9 percent year-on-year decline posted in February.

Markit's Purchasing Managers' Index (PMI) showed growth in the Brazilian manufacturing sector for the third month in a row in March. The private-sector index stood at 51.1 last month, above the 50 mark that divides growth from contraction, as factories reported greater client demand.

"The most critical period is behind us, we think," said Leonardo Sapienza, chief economist at Banco Votorantim.

But Santander analysts said that expanding industrial production was probably not matched by sales in March, leading to higher inventories. That could point to a slower pace of growth in the second quarter, they said.

Automobile output jumped 41.6 percent in March from the prior month, according to the national automakers association, Anfavea. Car sales, in turn, rose 20.5 percent.

"This is not a strong recovery. It's rather an uptick move, after weak results in the previous months," said Darwin Dib, chief economist at CM Capital Markets, in São Paulo.

Brazil's national statistics agency IBGE will release official data for March's industrial output on Thursday, May 3, at 9 a.m. local time (1200 GMT).

Forecasts for the increase in monthly industrial output ranged from 0.7 percent to 2.6 percent. Estimates of the annual comparison varied from a drop of 0.6 percent to a rise of 2.7 percent. (Reporting by Silvio Cascione; Editing by Padraic Cassidy)



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