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UPDATE 1-Italy industry output unexpectedly rises in August

(Adds economist quotes)

* Italian output jumps 1.7 pct m/m in August * Beats analyst forecasts for a decline * ISTAT cautions on seasonal distortions By Catherine Hornby

ROME, Oct 10 (Reuters) - Italian industrial outputunexpectedly rose in August, offering some hope that recessionmay be easing slightly although the statistics bureau cautionedthat seasonal factors may have distorted the data.

Output rose 1.7 percent month-on-month after an upwardlyrevised 0.1 percent fall in July. The figure beat all forecastsin a Reuters poll that had spanned -1.4 percent and +1.6 percentand averaged -0.4 percent.

August output data in Italy can be highly erratic becausemany factories are closed for the summer break, making seasonaladjustment more important and more difficult than in othermonths, a spokesman for the national statistics office ISTATsaid.

"It nevertheless shows some positive trends in industry, butwe will have to wait for September and October data to see ifthose trends continue," the spokesman said.

The euro zone's third-biggest economy has been mired inrecession since the middle of last year. It shrank 0.8 percentin the second quarter of 2012 compared to the first, and shrank2.6 percent compared to the same period a year earlier.

Unicredit analyst Chiara Corsa said the output data was"undoubtedly strong" even when considering seasonal factors. Shesaid it confirmed her expectation that the pace of recessionwould ease in the third quarter to about -0.6 percent.

Paolo Mameli from Intesa Sanpaolo said he may revise up hisforecast for the economy to contract by 0.7 percent in the thirdquarter following the data, though he expected the rise inoutput in August would be reversed in September.

Italy's economic slump has been accentuated by austeritymeasures adopted by Mario Monti's technocrat government when hetook office at the end of last year, aimed at heading off a debtcrisis.

The government said in September it expected the economywould shrink this year by 2.4 percent, twice as much as theprevious projection of a 1.2 percent drop, made in April.

ISTAT has said it expects the economy may contract slightlyless than the government forecasts this year, pointing to signsof an improvement in industrial output and confidence in thesecond half of the year.

In August, output rose in the consumer and investment goodssector and in the energy industry, while falling slightly in theintermediate goods sector, Wednesday's data showed.

The overall rise in Italy's output mirrored a better thanexpected 1.5 percent surge in French industrial output inAugust, while output in Germany, Europe's largest economy, fell0.5 percent due to a weaker construction sector.

Germany, France and Italy make up around two thirds of totaleuro zone industrial output. Aggregate data for the currencybloc will be released on Friday.

On a work-day adjusted year-on-year basis, Italian output inAugust was down 5.2 percent, compared to a 7.2 percent declinein July.

(Additional reporting by Elvira Pollina, Andrea Mandala andGiulio Piovaccari; Editing by Susan Fenton)

((catherine.hornby@thomsonreuters.com)(+ 39 0685 224394)(Reuters Messaging:catherine.hornby.thomsonreuters.com@reuters.net))

Keywords: ITALY OUTPUT