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UPDATE 2-Mexican economy stagnates in second quarter, weaker than earlier estimated

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MEXICO CITY, Aug 23 (Reuters) - Mexican gross domestic product (GDP) was unchanged in the second quarter from the previous three-month period, slightly weaker than a preliminary estimate published last month, data from the national statistics agency INEGI showed on Friday.

The figures showed the Mexican economy was even closer to entering a recession in the first half of 2019 than previously estimated, underlining the economic challenge facing President Andres Manuel Lopez Obrador.

The provisional INEGI estimate on July 31 had shown the economy expanding by 0.1% during the April-June period.

GDP figures for the first quarter were also revised down by a tenth of a percentage point to show the economy contracted by 0.3% compared with the final quarter of 2018.

"This confirms the economic stagnation in Mexico during the first half of 2019," said James Salazar, an analyst at CI Banco.

A technical recession is generally defined as two consecutive quarters of economic contraction.

Lopez Obrador had hailed the preliminary estimate showing the economy advancing, albeit minimally, in the second quarter. But the final GDP figures for the period make it less likely the economy will grow by 2% this year as he had hoped.

News of the stagnation will likely lend weight to forecasts that the Mexican central bank could cut its benchmark lending rate for a second time in succession when its board makes its next monetary policy decision near the end of September.

Central Bank Governor Alejandro Diaz de Leon earlier this week flagged his concern about the growth outlook, and the case for a rate cut was bolstered by data on Thursday showing that inflation slowed more than expected in early August.

Some of the decisions made by Lopez Obrador, a leftist exponent of economic nationalism, have shaken investor confidence in Mexico, dampening hopes for growth.

Lopez Obrador took office in December vowing to reduce chronic inequality and deliver average annual growth of 4%.

Compared to the same quarter a year earlier, Mexico's economy, Latin America's second largest, contracted by 0.8% in unadjusted terms during the April-June period.

Separate data from INEGI showed that the economy grew by 0.2% in June from the previous month. (Reporting by Anthony Esposito, Dave Graham and Sharay Angulo; Editing by Bernadette Baum)