UPDATE 1-German industry output suffers biggest slump since 2009

* Output slumps 3.5% m/m

* Orders also plunged, data released on Thursday showed

* Trade disputes, Brexit hurting export-dependent manufacturers

* Coronavirus poses additional risk (Adds background)

BERLIN, Feb 7 (Reuters) - German industrial output registered its biggest drop in more than a decade in December, highlighting the weakness of the manufacturing sector that is dragging on overall growth in Europe's largest economy.

Industrial production tumbled by 3.5% on the month, undershooting expectations for a 0.2% fall, data from the Statistics Office showed. That was the biggest drop since January 2009 and came after an upwardly revised 1.2% increase in November.

Separate trade figures showed seasonally adjusted exports edged up by 0.1% on the month while imports fell by 0.7% in December.

Germany's export-dependent manufacturers are struggling with sluggish demand from abroad as well as business uncertainty linked to trade disputes and Britain's decision to leave the European Union. The services sector is in better shape.

The Ifo economic institute said on Thursday that the coronavirus could also cost Germany growth.

"Germany's auto firms have been hit by the fallout from the coronavirus, which is making it hard to source some key components," said Andrew Kenningham at Capital Economics.

"In short, it is still too early to sound the all clear for German industry."

The output figures came a day after the release of data showing industrial orders unexpectedly plunged in December on weaker demand from other euro zone countries, suggesting there is no let-up in sight for the manufacturing sector.

Highlighting the slowdown, Siemens on Wednesday reported first-quarter results that missed forecasts after a slowdown in its industrial automation business and problems in its power and gas and wind power operations.

The German economy narrowly dodged recession last year, and the Ifo institute's monthly survey last week showed business morale weakening, suggesting the economy got off to a slow start in 2020.

Chancellor Angela Merkel's ruling coalition is at odds over how to spend the federal government's budget surplus of 13.5 billion euros. Her conservatives are calling for corporate tax cuts, while center-left Finance Minister Olaf Scholz favors more public investment. (Reporting by Paul Carrel Editing by Michelle Martin)