By Martin Santa
BRUSSELS (Reuters) - Euro zone industrial production contracted unexpectedly for a second month in a row in June, further denting hopes of a stronger recovery as the bloc starts to take the hit from conflict in Iraq, Ukraine and Gaza, data showed on Wednesday.
Output at factory gates single currency bloc fell 0.3 percent on the month in June after a 1.1 percent drop in May, against market expectations of a 0.3 percent rise.
When compared with the same period of last year, production was flat, following an upwardly revised 0.6 percent rise in May, while economists polled by Reuters expected a 0.1 percent annual increase in June.
It was the lowest annual reading since August 2013.
The monthly drop was due mainly to a 1.9 percent drop in production of non-durable consumer goods, down for a second consecutive month and 0.7 percent fall in energy production, which was up in the previous three months.
Economic recovery in the 9.6 trillion euro economy is struggling to gain momentum a year after exiting a recession, throttled by combination of high unemployment, sluggish reform the fallout from conflict in Ukraine, Gaza and Iraq.
The latest sign of just how fragile the euro zone's economic rebound remains came from Germany on Tuesday where investor sentiment nosedived to its lowest since December 2012 on what impact European sanctions against Russia will have.
Eurostat will publish the second quarter economic growth flash estimate on Thursday. Economists surveyed by Reuters expected an expansion of 0.2 percent on the quarter in the three months to June, the same pace as seen in the first quarter.
While the bloc's three largest economies saw production rising on the month in June, Germany's industrial output fell 0.4 percent year-on-year in June in the country's first annual drop since July 2013.
The bloc's No. 2 economy, France, saw flat output on the year in June, its best performance since December, and Italy's industrial production rose by 0.4 percent in June after a 1.7 percent decline in May.
Much stronger expansion, a scenario not seen as likely any time soon, is needed to spur job creation and rejuvenate countries choked by austerity and the legacy of recession.
(Editing by Louise Ireland)