* Chinese,European manufacturing data suggest some stability
* India, Britain, Italy, Spain see activity shrinking
* Auto sales rise on car scrappage schemes
* Britain's Brown calls for greater coordination in policy
By Jason Subler and Nigel Davies
BEIJING/LONDON, Sept 1 (Reuters) - Manufacturers offered evidence of sustained recovery in China and signs of stability in Europe on Tuesday, indicating a global upturn from the worst recession since World War Two is taking hold.
But despite the positive signs from China, which some politicians hope will power the recovery by maintaining its appetite for imports, performance remains patchy.
Indian manufacturers recorded their slowest growth in five months and manufacturing activity shrank in August in Britain, Italy and Spain, which lag France and Germany, the driving forces behind Europe's recovery.
Economists say further growth could be hindered by high unemployment and any winding up of the trillions of dollars governments have injected into the economy to spur the recovery.
"Euro zone unemployment still seems likely to rise markedly higher, thereby posing a serious threat to growth prospects over both the near and medium term," said Howard Archer, analyst at IHS Global Insight.
Euro zone manufacturing activity shrank less than expected in August, with the Markit Eurozone Manufacturing Purchasing Managers Index jumping to 48.2 from 46.3 in July -- still well below the 50 mark that divides growth from contraction.
For Spain and Italy rates of contraction accelerated and Britain's manufacturing sector dipped unexpectedly.
Analysts said the region's economy should grow in the third quarter, matching the United States, but that could be hindered by unemployment, which rose in the euro zone in July to its highest since May 1999, data showed.
In the region's biggest economy Germany, unemployment fell for the second month in a row, but jobs have been supported by government measures designed to prevent mass layoffs before an election on Sept. 27.
In eastern Europe, manufacturing in Poland and the Czech Republic neared the recovery level, hovering beneath 50. But industrial sentiment in Hungary slumped.
SCRAPPING CARS BOOSTS SALES
Analysts say recovery could falter if governments wind up stimulus packages, aimed at spurring lending to companies and sales of goods, too soon.
Data for European August car sales have shown a boost from incentive schemes giving drivers cash bonuses for trading in old cars for newer, less polluting models.
French new passenger car sales rose 7 percent in August to 110,607 units, carmakers' association CCFA said. Sales of light utility vehicles, which are not eligible for payouts, plunged.
Spanish sales were flat, automakers' association ANFAC said.
Companies in Europe and the United States have largely reported better than expected results recently, suggesting that the recession has largely eased.
The banking sector, where the crisis began when a boom in high-risk debt went sour, has mostly recovered, but several leaders have suggested they rein in bonuses and plan to raise the issue at the Sept. 4-5 meeting of G20 leading developed and emerging nations.
German Chancellor Angela Merkel said lending conditions would have to tighten once the crisis was over.
"The money supply will have to be reduced," she told Bayerische Rundfunk radio. She said "exit strategies" should be implemented when the economy has regained the levels it saw before the crisis.
In an interview with the Financial Times before the G20, British Prime Minister Gordon Brown called for greater international coordination in winding up the stimulus.
"There has to be more cooperation in the future, not less, and this new way of governing the world economy, whatever it is called -- some people talk about a compact for growth over the next year -- is a necessary element of all countries coming through this very, very difficult period," he said. (Writing by Elizabeth Piper; Editing by Ruth Pitchford)