PRECIOUS-Silver drops 7 pct, gold down in commodities rout

* Silver drops over 7 pct in commodities rout

* Gold down 1 pct on view China's inflation to ease

(Recasts, updates prices, market activity; new byline, changes dateline, previous LONDON)

By Frank Tang

NEW YORK, May 11 (Reuters) - Silver fell more than 7 percent on Wednesday, breaking a three-day rebound from last week's 25 percent decline and dragging gold as crude oil tumbled and after China's industrial output growth eased much more than expected.

Silver's losses accelerated as energy products plummeted, leading a sharp decline across the commodity sector. U.S. government data showing rising crude oil and gasoline inventories triggered a steep sell-off in gasoline, crude oil and heating oil futures.

Earlier, Chinese data showed industrial output growth eased much more than expected in April, while consumer inflation in the world's second biggest economy eased modestly from a 32-month high in March. [ID:nL3E7GB0H2]

China is a major consumer of silver and the second-largest consumer of gold. More than half of silver's global output is consumed by the industrial sector.

The Reuters/Jefferies CRB index <.CRB>, a broad measure of commodity performance, fell 2.5 percent.

"China is trying to contain inflation, and some of the measures it has enacted will likely to have an impact on economic growth. It's another reason for people to take money off the table for commodities in the short term," said Evan Smith, co-manager of U.S. Global's Global Resources Fund , which has $1 billion assets.

Spot silver rose as much as 2.7 percent early, then reversed those gains and was down 7.2 percent to $35.70 by 12:13 p.m. EDT (1613 GMT).

Silver lost nearly one-fifth of its value last week. Before Wednesday's dive, the metal had rebounded as much as 19 percent since Friday.

Sharply lower U.S. gasoline futures, triggered a five-minute halt in trading of energy products including crude oil futures. [O/R]

Spot gold fell 1 percent to $1,500.57 an ounce. COMEX gold futures for June delivery were down $16.30 to $1,500.60.

Silver's tumble pushed the gold/silver ratio, which measures how many ounces of silver an ounce of gold can buy, toward a three-month high.

Silver, hit by a succession of margin increases that nearly doubled trading costs, fell 25 percent last week, its biggest such decline since prices collapsed in 1980. Prices at 12:13 p.m. EDT (1613 GMT)

LAST NET PCT YTD

CHG CHG CHG US gold 1500.60 -16.30 -1.1% 5.6% US silver 35.715 -2.751 -7.2% 15.5% US platinum 1782.70 -18.20 -1.0% 0.3% US palladium 718.05 -14.60 -2.0% -10.6% Gold 1500.57 -14.58 -1.0% 5.7% Silver 35.68 -2.77 -7.2% 15.6% Platinum 1777.24 -16.31 -0.9% 0.6% Palladium 717.50 -7.90 -1.1% -10.3% Gold Fix 1508.00 -16.50 -1.1% 6.9% Silver Fix 39.18 78.00 2.0% 27.9% Platinum Fix 1793.00 10.00 0.6% 3.6% Palladium Fix 725.00 9.00 1.2% -8.3% (Additional reporting by Amanda Cooper in London and Rujun Shen in Singapore; Editing by David Gregorio)