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The price data, along with those on money supply and bank credit published on Wednesday, offered tentative signs that the government was making some headway in taming inflation.

The government has been treading cautiously to curb price rises without undermining growth in the world's second-largest economy.

"The April data is quite mixed as industrial production weakened but investment activities remained strong. From an overall view, the economic situation is still relatively hot," said Shao Yu, economist with Hongyuan Securities in Shanghai.

"The April economic indicators make it less likely that the central bank will raise required reserve ratios or interest rates. I believe the central bank will, at most, raise reserve requirements once in the coming two months."

China's industrial output in April missed expectations with a slight slowdown to 13.4 percent year-on-year from a 14.8 percent pace in March, the National Bureau of Statistics said.

Economists polled by Reuters had forecast a 5.2 percent rise in the consumer price index and a 14.7 percent increase in industrial output.

Chinese banks extended 739.6 billion yuan ($113.9 billion) in local currency loans in April, more than market forecasts for 700 billion yuan, the People's Bank of China said on Wednesday.

Yuan loans outstanding at the end of April were 17.5 percent higher than a year earlier, the central bank said.

Though far too soon for Beijing to declare victory in its battle against inflation, the stabilization of prices suggested that tighter monetary policy was beginning to produce initial results.

The government has a target of 4 percent annual inflation, but some analysts said it could be tough to achieve that goal given increasing labor costs and rising commodity and fuel prices.

The central bank has raised interest rates four times since October. It has also raised banks' reserve requirements seven times, locking up a record 20.5 percent of deposits for big banks that could otherwise become loans.

(Reporting by Aileen Wang, Kevin Yao and Simon Rabinovitch; Editing by Ken Wills)

Microsoft (MSFT.O) is close to buying Skype Technologies in am $8.5 billion deal, a source familiar with the situation said, underscoring the technology giant's growing ambition to plug a hole in its mobile offerings.

U.S. crude oil futures were down 92 cents at $101.67 a barrel but off their session low as the euro pared losses against the dollar on reports a deal for Greece could be sealed as early as June. A senior Greek finance ministry official told Reuters the reports were not true.

European stocks reversed an early dip to be up 0.6 percent, led by a rebound in banking stocks such as BNP Paribas (BNPP.PA) and ING (ING.AS).

China posted its biggest trade surplus in four months in April, swinging from a trade deficit in the first quarter after exports hit a record on stronger global demand despite initial signs of a pinch from Japan's earthquake and nuclear crisis.

TSMC (2330.TW) and UMC (2303.TW), the world's two biggest contract chipmakers, posted slower sales growth in April, after Japan's earthquake brought a supply shortfall for key materials in producing smartphones and tablets.

Analysts expected sales in May and June would continue to grow, in line with company forecasts, and said impact from a potential water shortage would be small on the two chipmakers.

Morgan Stanley (MS.N) said it could lose up to $240 million in a lawsuit filed by Taiwan's China Development Industrial Bank (CDIB) over a subprime mortgage investment.

On the earnings front, investors awaited results from Dean Foods (DF.N) and Walt Disney (DIS.N), while on the economic front, the market expected import-export prices for April, the retail sales index of department and chain store sales for May, as well as U.S. wholesale inventories data.

U.S. stocks rose on Monday as commodity-related shares rebounded from last week's collapse, masking deeper doubts about what will sustain the market's long-term strength.

The Dow Jones industrial average .DJI was up 45.94 points, or 0.4 percent, at 12,684.68. The Standard & Poor's 500 Index .SPX was up 6.09 points, or 0.5 percent, at 1,346.29. The Nasdaq Composite Index .IXIC was up 15.69 points, or 06 percent, at 2,843.25. (Reporting by Blaise Robinson; Editing by Dan Lalor)