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UPDATE 2-German exports, output unexpectedly drop in December

* Exports fall in 2013, first full-year drop since 2009

* But imports down more, trade surplus reaches highest on record

* Data shows re-balancing in trade with euro zone

* Industrial output posts surprise drop on seasonal effects in Dec

(Adds industrial output data)

BERLIN, Feb 7 (Reuters) - German exports unexpectedly fell on the month in December and industrial output declined, signalling that the brighter global outlook does not yet mean it can rely on foreign demand to power growth.

Federal Statistics Office data on Friday also showed Germany's trade surplus - the subject of sharp criticism from the United States, among others - reached a new record last year as imports fell more sharply than exports.

In December, seasonally-adjusted exports were down 0.9 percent compared with an upwardly revised increase of 0.7 percent in November. A Reuters poll had forecast a fifth consecutive monthly gain, of 0.8 percent.

Industrial output also disappointed.

It fell 0.6 percent in December, thwarting expectations for a rise of 0.5 percent, although the Economy Ministry blamed seasonal effects and said the outlook for manufacturing in 2014 remained positive. A more reliable two-month average showed output up 1.5 percent over the November-December period.

Analysts said the figures suggested next week's first official reading of fourth quarter gross domestic product could fall short of the 0.3 percent rise forecast.

"With today's numbers, the last faint hope that fourth quarter growth could still surprise to the upside has disappeared," said Carsten Brzeski of ING.

The Statistics Office said last month the economy probably grew by around a quarter of a percentage point in the last quarter and by 0.4 percent during all of 2013.

Hard data for December has been disappointing so far. Figures released on Thursday showed industrial orders also unexpectedly dropped.

"The dichotomy between soft and hard data has been a striking conundrum of the German economy in recent weeks," said Brzeski. "Most confidence indicators stand close to all-time-highs and the optimism is strong.

"At the same time, however, hard economic data has rather disappointed. Today's numbers were another illustration that the economy did not stage the expected year-end-sprint but rather slowed down."

Trade figures for the full year showed shipments abroad fell 0.2 percent in 2013, weighed down by a sharp fall in demand for "Made in Germany" goods from euro zone countries struggling with recession. That was the first full-year drop in exports since 2009, when German economic growth contracted sharply.

Imports also dropped unexpectedly in December, by 0.6 percent, missing a forecast to rise 1.2 percent. The seasonally-adjusted trade surplus narrowed to 18.5 billion euros from a revised 18.9 billion euros in November.

On the year, imports dropped 1.2 percent, resulting in a widening of the trade surplus to 198.9 billion euros, the highest on record.

Germany has come under international pressure for relying too heavily on foreign markets for growth and not fostering domestic demand which would in turn benefit struggling trade partners within the now 18-member euro zone.

Berlin argues that it has more than halved its current account surplus with the euro zone as a share of gross domestic product since 2007 and is relying more on domestic demand than trade to drive growth at the moment. The Statistics Office said foreign trade subtracted from economic growth in 2013.

Christian Schulz at Berenberg Bank said Friday's data showed trade with the euro zone was now nearly balanced, with exports to the currency bloc falling to 401.9 billion euros for 2013 while imports from it were steady at around 401.2 billion euros.

"Germany's trade outlook for 2014 is mixed," Schulz said. "Strengthening export markets in the developed world could be offset by weaker demand in those emerging markets currently in turbulence.

"But the trade surplus looks set to stabilise or even shrink as stronger domestic demand should boost imports more than strengthening global demand will increase exports," he added.

(Additional reporting by Alexandra Hudson; Editing by Catherine Evans)