* PMI surveys suggest India, China on road to recovery
* Asian shares rally to seven-month high
* Bank of America plans to raise $10 bln capital-FT
* Russian manufacturing sector contraction slows
* Australian house prices show surprisingly steep fall
By Alex Richardson
SINGAPORE, May 4 (Reuters) - The manufacturing sectors in China and India grew for the first time in months in April, surveys showed on Monday, offering evidence the global economy may be through the worst of its sharpest slump in six decades.
The latest signs of "green shoots" from the world's emerging giants followed U.S. data on Friday that showed a rise in consumer confidence and suggested manufacturing conditions were gradually improving, helping push Asian stocks to seven-month highs on Monday.
Markets also waited for the results of the U.S. bank "stress tests", with the Financial Times reporting Bank of America was planning to raise more than $10 billion in fresh capital even as it and Citigroup attempt to convince the government they do not need to bolster their balance sheets.
Hong Kong-based brokerage CLSA said its China Purchasing Managers' Index (PMI) rose to 50.1 in April from 44.8 in March. It was the first time since July 2008 the seasonally-adjusted index climbed above the 50-point watershed mark that separates expansion from contraction.
"China's government has been extremely successful in stimulating investment and, combined with a sharp improvement in export orders, this has pushed the PMI back into positive territory in April," said Eric Fishwick, head of economic research at CLSA.
The private sector report reinforced the positive signals from a similar survey produced by the National Bureau of Statistics.
SIGNS OF RECOVERY?
A series of global PMI surveys -- which record changes in items such as output, orders, employment, inventories and prices -- have suggested or are forecast to show signs the world economy may be through the worst of the downturn.
In India, the ABN AMRO Bank purchasing managers' index rose to 53.3 in April from March's 49.5, its highest in seven months.
And in Russia, the third of the so-called BRIC quartet of big emerging economies that also includes Brazil, the VTB Capital Purchasing Managers' Index on Monday showed the manufacturing sector contracted at its slowest pace in six months in April.
The euro zone manufacturing PMI index later on Monday was expected to rise, according to a Reuters poll, although it was forecast to remain well below 50, while reports from Japan and Britain last week told a similar story.
With Japan closed for a holiday, shares elsewhere in Asia-Pacific rose nearly 5 percent on Monday, pushing the regional index to its highest level since mid-October and taking its two-month rally to 45 percent from early March lows.
Financial and technology shares led the gains, as evidence mounted that global trade is starting to pick up and investors took the view that the U.S. banking system has already suffered the worst of the crisis and is getting healthier.
"Bank earnings are coming out fine and investors increasingly believe the result of the U.S. banking sector's stress test will be tolerable," said Kim Hak-kyun, an analyst at Korea Investment & Securities in Seoul.
STRESS TESTS
The global recession was triggered by a crisis in the financial sector and the U.S. government has been conducting unprecedented "stress tests" on 19 banks to determine if they have enough capital to withstand further shocks.
Citing people familiar with the situation, the Financial Times said Bank of America, Citigroup and at least two other lenders would on Monday attempt to convince the U.S. Treasury and Federal Reserve that the findings were too pessimistic.
Bank of America, which has already received $45 billion in government bailout funds, was found to need well in excess of $10 billion, the FT said. A government official said the results of the stress tests would be made public on Thursday.
Warren Buffett, considered by many to be the world's best investor, criticised the conduct of the tests on Sunday, telling a news conference they failed to properly assess the industry's health because they ignored differences in business models.
Even regions largely unaffected by the banking meltdown have been suffering, with many export-focused emerging economies hit by a collapse in demand for their products in the West.
On Sunday, 13 East and Southeast Asian countries agreed to set up a $120 billion emergency fund in the first independent move by Asia to shield itself from the crisis.
Australia, which has fared better than most industrialised countries, posted some unexpectedly weak data on Monday, showing house prices falling at the fastest pace in at least six years in the last quarter and a record drop in job advertisements pointing to higher unemployment.
"The weakness in house prices was a shock and bodes ill for household wealth and confidence, while the jobs figures were just terrible," said Stephen Roberts, an economist at Nomura. (Reporting by Reuters correspondents worldwide; Editing by Tomasz Janowski)