BEIJING (Nov 20): Growth in China's vast factory sector stalled in November, with output contracting for the first time in six months, a private survey showed on Thursday, adding to signs that the economy may still be losing traction.

The reading is the latest in a string of weak figures in recent weeks, strengthening the case for more stimulus to avert a sharper slowdown in the world's second-largest economy.

The flash HSBC/Markit manufacturing purchasing managers' index (PMI) fell to a six-month low of 50.0 from a final reading of 50.4 in October and well below the 50.3 forecast by analysts.

A reading above 50 indicates expansion, while one below 50 points to contraction on a monthly basis.

"Disinflationary pressures remain strong and the labour market showed further signs of weakening," said Hongbin Qu, chief China economist at HSBC.

"Furthermore, we still see uncertainties in the months ahead from the property market and on the export front. We think more monetary and fiscal easing measures should be deployed."

Overall new orders picked up slightly but new export orders slowed markedly, dragging on activity. The factory output sub-index fell to 49.5, the first contraction since May.

The Australian dollar dipped on the report while Asian stock markets showed little immediate reaction.

A cooling property sector, erratic foreign demand and overcapacity have weighed on its manufacturers and the broader economy this year despite a steady stream of stimulus measures.

Most analysts expect further support steps in coming months but are divided over whether Beijing will resort to more aggressive policy measures such as interest rate cuts unless conditions threaten to sharply deteriorate.

Other data this week showed home prices fell further and foreign direct investment continued to slide.

China's top economic planning body said on Wednesday that the economy faces increasing downward pressure in 2015, while the cabinet promised help lower funding costs by giving banks more flexibility to lend.

Analysts believe injections of extra funds by the central bank have been largely intended to keep borrowing costs low as rising bad loans make banks increasingly reluctant to lend.

But a growing chorus of economists including some at government think tanks say these "modest" and "targeted" measures are not working. They now predict the central bank will have to cut interest rates, with some seeing a move by year-end. (1 US dollar = 6.1190 Chinese yuan)