The Markit/CIPS manufacturing Purchasing Managers' Index (PMI) rose to 51.0 last month from 50.8 in February, rounding off one of its weakest quarters in the past three years, the survey showed.

The domestic market was the main source of new business with

new export orders contracting for a third month in a row,

primarily due to the slower global economy, Markit said.

Economists in a Reuters poll had expected the manufacturing

index to rise to 51.2.

"Industry is still hovering close to the stagnation mark and will struggle to make a meaningful contribution to the next set of GDP growth figures," Rob Dobson, senior economist at survey compilers Markit said.

British economic growth in the fourth quarter of 2015 was driven entirely by the dominant services sector. A survey on the services sector is due next week.

Britain has been one of the fastest-growing advanced economies in the last three years but slowed in the second half of 2015 as the global economy weakened.

The approach of a June 23 referendum on Britain's membership of the European Union is likely to weigh on growth, and a vote to leave the world's largest trading bloc would deliver a shock to the economy, at least in the short term, most economists say.

Concerns about a possible Brexit have weighed on sterling in recent months - a double-edged sword for British exporters.

"Although the drop in sterling may add some bounce to export performance in coming months, the exchange rate is likely to cause as many issues on the cost side through higher import prices as it aids for demand," Dobson added.

New export orders rose to 49.9 in March but remained below the 50 level which marks growth, according to the survey.

A measure of employment in the manufacturing sector fell in March to 48.6 from 49.5 in February - the third month in a row it was below the 50 mark denoting growth.

- Detailed PMI data are only available under licence from

Markit and customers need to apply to Markit for a licence.

To subscribe to the full data, click on the link below: http://www.markit.com/Contact-Us

((Reporting by Ana Nicolaci da Costa; Editing by Hugh Lawson))