The HSBC Purchasing Managers' Index for China's services sector fell to 52.5 from 54.1 in November, signalling its slowest rate of growth in three months and the latest in a series of data points portraying a quickly cooling economy in need of policy support.

With price pressures easing further, Beijing can and should use policies that are targeted on small businesses and service sectors to keep GDP growth at above 8 percent for the coming year, Hongbin Qu, HSBC's chief China economist, said in a statement.

The fall in the HSBC gauge is sharp given that October's reading was 54.1 -- the strongest growth in four months -- though the index still remains above the 50 level that separates expansion from contraction in the sector.

China's official PMI for its non-manufacturing sector fell to 49.7 in November from 57.7 in October, the China Federation of Logistics and Purchasing said on Saturday.

The readings mirror similar weakness in the country's giant manufacturing sector and underline expectations that Beijing will ease monetary policy further to cushion the blows of the global economy.

PMI data in the past week has shown that both domestic and export orders are weakening, helping explain the central bank's decision last week to cut reserve requirements for commercial lenders for the first time in three years.

The move to free up cash was a signal that the central bank was shifting toward loosening monetary policy to support the economy, which is widely expected to grow next year at less than 9 percent for the first time in a decade, economists said.

Some economists are reluctant to read too much significance into the services indexes given their volatility, lack of seasonal adjustments, simple calculation methodology and their consequently weaker predictive power.

For instance the reading of 49.7 in China's official November was an 8 point plunge from October, but smaller than the 9.5 point average since 2007, the starting point for this series, according to Tim Condon, head of Asian economic research at ING in Singapore.

Past performance suggests that half that decline will be recovered in December, leaving the index in the mid-50s, though that is well below the near-60 level it has been at for most of the last 18 months and a clear sign of a slowing economy.

The weakness in the manufacturing sector is spreading to the non-manufacturing economy. We think the policy fine-tuning also will spread, ING's Condon said.

(Reporting by Zhou Xin and Nick Edwards; Editing by Ken Wills)