Euro zone industry output drops by more than expected in July

BRUSSELS (Reuters) - Euro zone production fell for a second consecutive month and by more than expected in July, showing industry in the single currency bloc entering the third quarter in a negative tone.

Industrial production in the euro zone area fell by 0.4% in July from June and by 2.0% year-on-year. Economists had predicted less sharp drops in output of 0.1% month-on-month and 1.3% from a year earlier.

Eurostat did though revise up its June data, which now shows a 1.4% drop in production in the month instead of the 1.6% estimated earlier. The year-on-year figure for June was hiked to a negative 2.4% from the previous minus 2.6%.

The weakest component in the July figures was production of non-durable consumer goods, such as clothing and packaged food, which fell by 0.8%. Energy output was also down 0.7%.

The positive notes, however, a 1.2% rise in output of durable goods, such as televisions and cars, and a 1.8% increase in output of capital goods, such as machinery.

European Central Bank policymakers will later on Thursday unveil fresh stimulus measures to prop up an ailing euro zone economy that has been partly hit by slowing trade.

Euro zone economic growth declined to 0.2% in the second quarter from 0.4% in the first three months of the year. Germany, the bloc's largest economy, contracted.

(Reporting by Philip Blenkinsop)