By Richard Silk 

BEIJING--A closely-watched gauge of activity in China's manufacturing sector rose in October, after holding steady at a three-month low in September, a result which may go some way to ease concerns over the pace of Chinese economic growth.

The preliminary HSBC China Manufacturing Purchasing Managers Index rose to 50.4 in October, compared with a final reading of 50.2 in September, HSBC Holdings PLC said Thursday.

A reading above 50 indicates expansion from the previous month, while a reading below 50 indicates contraction.

"While the manufacturing sector likely stabilized in October, the economy continues to show signs of insufficient effective demand," HSBC economist Qu Hongbin said in a statement.

The subindexes for input and output prices both declined, indicating that weak demand continues to feed disinflationary pressures, but the employment subindex improved, Mr. Qu added.

The preliminary PMI figure, also called the HSBC flash China PMI, is based on 85% to 90% of total responses to HSBC's PMI survey each month, and is issued about one week before the final PMI reading.

Write to Richard Silk at richard.silk@wsj.com