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BRUSSELS, Nov 12 (Reuters) - Euro zone industrial production fell more than expected in September, data showed on Wednesday, underlining expectations that the economy contracted in the third quarter and entered a recession.
Production in the 15-country area fell 1.6 percent month-on-month and 2.4 percent year-on-year, the European Union statistics body said. Economists polled by Reuters had expected a 1.3 percent monthly fall and a 0.9 percent annual decrease.
The year-on-year decline in overall production was the fifth in a row.
The euro zone economy shrank 0.2 percent in the second quarter and the European Commission estimates it contracted by 0.1 percent in the third, adding up to two consecutive quarters of negative growth -- a recession.
"The 0.9 percent quarter-on-quarter decline in industrial production in the third quarter reinforces belief that euro zone GDP contracted during the period, thereby putting the region into recession," said Howard Archer, chief European economist at Global Insight.
The biggest drop occurred in the production of durable consumer goods, which fell 2.5 percent on the month and 6.7 percent in annual terms, the Eurostat data showed.
Intermediate goods output shrank 2.6 percent against August and 3.5 percent versus the same period a year earlier.
Slowing growth is easing inflationary pressure in the economy and therefore creates room for interest rate cuts by the European Central Bank, the head of the Organisation for Economic Cooperation and Development, Angel Gurria, said.
The ECB has cut rates by 100 basis points to 3.25 percent since October. Economists expect more easing, with some forecasting the main refinancing rate at 2.0 percent in mid-2009.
"Worryingly, the recent sharp falls in the industrial surveys suggest that worse is to come - industrial production could continue to contract in Q4. In all, then, (there is) nothing here to prevent further sharp rate cuts by the ECB over the coming months," said Ben May at Capital Economics.
National data already published showed industrial output fell in the euro zone's three largest economies in September.
France's output drop of 0.5 percent was modest compared with record declines of 2.1 percent in Italy and 3.6 percent reported by Germany, the area's largest economy. (Reporting by Jan Strupczewski; Editing by Dale Hudson/David Stamp)