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UPDATE 2-Falling Thai output, other weak data add to pressure for rate cut

* Factory output -6.4 y/y in Jan vs revised -6.3 pct in Dec

* Political unrest hits growth prospects, consumption, investment

* Jan private consumption index +0.3 pct m/m, investment -0.3 pct

* Auto production in Jan down 54 pct y/y

* Current account surplus $0.22 bln in Jan vs $2.53 bln surplus in Dec

(Adds central bank data, details, quotes)

BANGKOK, Feb 28 (Reuters) - Thailand reported a fresh set of weak indicators on Friday, producing more evidence that the country's political crisis is hurting the economy and adding to pressure on the central bank to cut interest rates.

"We predict a rate cut of 25 basis points due to poor GDP data and monthly economic indicators," said Pragrom Pathomboorn, economist with KGI Securities about a policy meeting on March 12. "Economic sentiment is bad because of the prolonged political unrest."

Industrial output dropped 6.41 percent in January from a year earlier. That was less than the median in a Reuters poll of a 7.40 percent fall, but made January the 10th straight month of reduced factory activity.

Also on Friday, the Bank of Thailand (BOT) reported a shrinkage in the January current account surplus from December, plus tepid private consumption and investment indexes that show the weak state of domestic demand. The central bank said exports fell 1.5 percent in January, a figure similar to that reported earlier by the Commerce Ministry.

Don Nakornthab, senior BOT official, said economic growth could be less than 3 percent this year "due to weakening domestic demand in the first half."

ACTIVITY 'SOFTENS'

"Overall economic activities in January 2014 continued to soften from the previous month owing to contraction in merchandise exports," the BOT said in a statement.

"The tourism sector was further affected by domestic political protest. Private-sector consumption and investment as well as manufacturing production continued to be subdued as households and businesses remained cautious in spending," it added.

The central bank's private consumption index rose 0.3 percent in January from December, but was down 1.5 percent from a year earlier. Its private investment index was off 0.3 percent from December and down 8.6 percent from January 2013.

Thailand's January current account surplus was just $219 million, compared with $2.53 billion in December.

Friday's data likely will increase the number of economists forecasting a rate cut when the BOT's monetary policy committee (MPC) meets on March 12.

Some analysts, however, have argued that a rate cut now would likely have little impact on business activity as long as the political crisis continues to fester with no resolution in sight.

The MPC unexpectedly kept its policy rate at 2.25 percent on Jan. 22. But the vote was 4-3.

On Friday, a senior Thai minister rejected a proposal for talks from the leader of an anti-government protest movement as demonstrators rallied to keep pressure on Prime Minister Yingluck Shinawatra.

A general election was held on Feb. 2 but was disrupted by protesters trying to remove Yingluck. Her caretaker administration has limited powers to borrow and spend.

Thailand is a regional production and export base for global car manufacturers and a major maker of hard disk drives. Thai factory output data generally tracks exports, which account for more than 60 percent of gross domestic product.

Overall, output dropped 3.18 percent in 2013. The Industry Ministry has forecast a 1.5-2.5 percent rise this year.

SLUMP IN AUTO PRODUCTION

Auto production slumped 54.4 percent in January from a year earlier while steel output dropped 10.2 percent and electrical appliances dipped 0.3 percent. Electronics output rose 3.6 percent on improved exports to key markets, the ministry said.

The pivotal auto sector has slowed since mid-2013 following the expiration of a state subsidy scheme for car purchases.

The unrest has not affected operation of plants or ports, but has hit demand.

"The political situation and weak economy should affect steel demand because the government's 2 trillion baht ($61 billion) infrastructure projects have been delayed," said Rajiv Mangal, president and CEO at Tata Steel (Thailand) Plc , a unit of India's biggest steelmaker.

Sampan Silapanad, president of the Electronic and Computer Employers' Association, said the political impact on production had been limited, but "there is no hope to see when the unrest will end, this uncertainty is causing gradual shifts in production bases. ($1 = 32.6 baht)

(Additional reporting by Pisit Changplayngam and Pairat Temphairojana; Editing by Richard Borsuk)