Swiss price fall eases in Sept, a year after franc capped

* CPI down 0.4 pct year/year, up 0.3 pct month/month

* Deflationary trend easing a year after SNB capped franc

* Franc weakens in recent weeks to around 1.21 per euro

ZURICH, Oct 8 (Reuters) - The fall in Swiss consumer prices eased slightly in September, a year after the central bank imposed a cap on the soaring franc to ward off deflation and a recession.

Swiss consumer prices fell 0.4 percent from a year ago, compared to a drop of 0.5 percent in August, and were 0.3 percent higher compared with the previous month. Both figures were in line with average analyst forecasts .

"The trend of the last two to three months of deflation weakening has continued. What is responsible for this is that the base effect from last year is disappearing," said Sarasin economist Alessandro Bee.

"For the end of the year we expect inflation around zero so that is no reason for the SNB to change course."

The SNB set the cap on the franc at 1.20 per euro on Sept. 6 2011 after investors seeking a safe-haven from the euro zone crisis pushed the currency from one record to another.

Core inflation, which strips out volatile price elements such as fuel, came in at minus 1 percent in September, down from 1.1 percent in August.

The franc spent months testing the 1.20 mark, forcing the SNB to intervene heavily to defend the limit, yet an easing of the euro zone crisis in recent weeks has seen it weaken against the single currency to trade around 1.21.

The amount of cash commercial banks hold with the SNB - called sight deposits and considered an early indicator of the SNB's interventions - fell for the third week running last week to 291 billion francs, data on Monday also showed.

The Swiss economy, which had proven surprisingly resistant to the crisis in the euro zone, contracted in the second quarter and the central bank expects growth to slow to 1 percent this year, given slack momentum globally.

A string of data has painted a downbeat picture, with manufacturing contracting for a fifth month running in August, consumer sentiment weakening further in the third quarter, and the ZEW investor sentiment index down in September.

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