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UPDATE 1-Household spending fuels pick up in pace of Spanish growth

(Adds details on consumer spending rebound)

MADRID, Aug 24 (Reuters) - Spending by Spanish consumers helped the economy expand at a faster pace in the second quarter, as the job market improved and households appeared to shrug off a spike in the price of goods, official data showed on Thursday.

Spanish gross domestic product expanded by 0.9 percent in the April to June period from the previous three months, up from the 0.8 percent growth recorded a quarter earlier, according to final data from the National Statistics Institute (INE).

That was in line with a preliminary reading and marked the fastest quarterly pace of growth since the third quarter of 2015, helping to edge Spain's economic worth above a peak seen at the beginning of 2008, before a prolonged recession.

Spain has defied expectations of a slowdown in its economic recovery this year amid stronger inflation and a rise in energy costs, which analysts had thought might hit consumption harder at the start of the year.

Spending by households accelerated in the second quarter compared to the first, however, the INE data showed.

Though unemployment remains painfully high in Spain - at 17.2 percent, it is still the second highest in Europe after Greece - the labor market has been recovering and the pace of job creation has also been stronger than many economists had expected this year.

Many new jobs are temporary, and especially those linked to the summer months when the tourist industry takes on people on short-term contracts. That has sparked concerns over how sustainable the turnaround will be. But so far the employment revival has underpinned a household spending rebound.

A recovery in the lending market, after Spain bailed out and restructured several banks during the peak of its financial crisis in 2012, has also helped consumers.

Robust exports have fueled Spain's recovery in recent years too, though these did not contribute as much to growth in the second quarter of 2017 as in the first.

Many economists as well as the government now believe Spanish growth rates will hit at least 3 percent in 2017, after GDP expanded by 3.2 percent in 2015 and 2016.

Spain emerged from a prolonged recession in mid-2013, and even the construction industry, which was plunged into chaos after a property bubble burst in 2008, is coming back to life. (Reporting by Sarah White; Editing by Keith Weir)