UPDATE 2-Rising costs hit China's manufacturers - surveys

(Adds CLSA survey, details)

By Simon Rabinovitch and Zhou Xin

BEIJING, July 1 (Reuters) - Inflation is taking a toll on China's businesses, as two manufacturing surveys show that input prices are rising and weighing on commercial activity.

The broader Chinese economy remained healthy but firms warned that they were passing rising costs on to consumers, which could hurt domestic demand, and struggling on export sales because of weak global markets.

The official purchasing managers' index (PMI), compiled by the China Federation of Logistics and Purchasing, fell to a nearly three-year low of 52.0 in June from 53.3 in May and 59.2 percent in April.

A reading over 50 indicates an expansion of activity, while one below 50 suggests contraction.

"Business is turning negative and this may undermine economic growth from the micro level," said Zhang Liqun, an economist with the Development Research Centre, a think tank under China's cabinet.

The measure for input prices paid by China's manufacturers rose to its highest since the PMI survey was launched in 2005. Orders in both the domestic market and for export fell to their lowest since January.