* Won gains after dovish Fed Yellen remarks
* Official China PMI report helps stocks recover
By Jungmin Jang
SEOUL, April 1 (Reuters) - The South Korean won hit its strongest level in more than three weeks on Tuesday after dovish comments by Federal Reserve Chair Janet Yellen weighed on the dollar, while stocks erased losses after an upbeat Chinese factory report.
The local currency was quoted at 1,060.6 against the dollar at 0326 GMT, up 0.4 percent from Monday's closing level of 1,064.7. It traded as high as 1,060.5, the highest level since March 7.
On Monday, Yellen defended the Federal Reserve's easy-money policies in her first public speech since becoming Fed chair two months ago, saying that there remains "considerable" slack in the economy and job market and that an "extraordinary" commitment to boosting the economy would be needed for some time to come.
Earlier in the day, a slew of upbeat economic indicators suggested South Korea's economy continues to recover, adding support to the won's rise.
"But there wasn't much follow-through trade trying to push the won higher," a foreign bank dealer said, adding that investors were wary about potential dollar-buying intervention by local authorities to slow the pace of the won's appreciation.
In the stock market, the Korea Composite Stock Price Index (KOSPI) was flat at 1,986.64 points after falling as low as 1,976.06.
China's official Purchasing Managers' Index increased to 50.3 in March from February's 50.2, in line with economists' forecasts. A separate private survey on China's March factory activity, however, fell to an eight-month low, adding to market expectations of government stimulus.
"The market is doing relatively well, cutting earlier losses on the back of persistent foreign buying and China's solid official manufacturing PMI," said Shinyoung Securities analyst Lee Kyung-soo, adding that local exporters could benefit from thawing global economies led by the U.S. and China.
Foreign investors purchased a net 34.3 billion won ($32 million) worth of KOSPI shares by midsession, following the largest amount of net buying since Oct. 23 in the previous session.
Decliners outnumbered advancers 395 to 368.
Among notable gainers, memory chip maker SK Hynix Inc advanced 2.6 percent and steelmaker POSCO added 1.4 percent.
But Samsung SDI Co Ltd fell 2.5 percent as investors locked in gains from its 6.6 percent jump on Monday, when SDI had announced it would acquire Cheil Industries Inc through a share swap.
The KOSPI 200 benchmark of core stocks was flat, while the junior KOSDAQ rose 1 percent.
0326 GMT Prev close Dollar/won 1,060.6 1,064.7 Yen/won 10.2682/741 10.3124 *KTB futures 105.71 105.72 KOSPI 1,986.64 1,985.61 * Front-month futures on three-year treasury bonds ($1 = 1064.4500 Korean Won) (Additional reporting by Lee Kyoungho; Editing by Chris Gallagher)