BEIJING (Reuters) - Chinese consumer inflation spurted to a 16-month high in February and a raft of economic data displayed broad-based strength, providing fresh arguments for policy tightening sooner rather than later.

The pace of credit growth halved in February, as expected, but some economists said the central bank would probably not wait long before increasing banks' required reserves for a third time this year and perhaps even raising interest rates or resuming gradual appreciation in the yuan.

"Given the pace of real activity growth, which is well above potential level, and an inflation rate which is already at around three percent, we believe it is vital for the government to take more decisive measures to tighten the economy to prevent overheating," Goldman Sachs economists Yu Song and Helen Qiao said in a report.

However, the People's Bank of China took the inflation figure in its stride, with Governor Zhou Xiaochuan saying the rise in prices was in line with expectations. The main Shanghai stock index ended the day little changed after initially dropping on the view that Beijing might need to hasten its policy tightening.

Consumer price inflation quickened to 2.7 percent in the year to February from 1.5 percent in the year to January, handily beating forecasts of 2.3 percent. The government wants to limit inflation for the whole year to three percent.

Tao Wang with UBS in Beijing was one of several economists who said the jump in February largely reflected a low base of comparison from a year ago, when the economy was slumping, as well as the impact of last month's Lunar New Year holiday.

"It will, though, give the market an expectation of a more imminent rate hike. Our forecast is that a rate hike should happen relatively soon, if not this month then probably early in the second quarter," she said.

Asian stocks fell nearly 0.3 percent and European stock futures signalled a lower start as investors priced in a tough policy response.

But comments by Chinese officials suggested these global markets might be getting ahead of themselves.

Sheng Laiyun, the spokesman for the National Bureau of Statistics, said inflation would remain "mild and controllable" and blamed February's rise on holiday spending and bad weather, which pushed up the price of food.

Su Ning, a deputy central bank governor, also cited the Lunar New Year effect and said China was not yet experiencing inflationary pressure.

Inflation now exceeds the 2.25 percent interest rate on 12-month certificates of deposit, raising the risk for policymakers that savers withdraw their cash from banks and plunge into the already bubbly property market.

Pipeline price pressures are also building. Annual factory-gate inflation quickened to 5.4 percent in February from 4.3 percent in January. Economists had forecast 5.2 percent.

Factory output exceeded expectations, expanding 20.7 percent in January and February from year-earlier levels, while retail sales growth of 17.9 percent was just a touch lower than forecast. Both readings marked an acceleration from December.

Only urban investment in fixed assets such as roads and factories slowed from a year earlier, when the government was launching its 4 trillion yuan ($585 billion) stimulus package.

Still, investment growth of 26.6 percent in January and February beat market forecasts of a 26.0 percent rise.