* Figure still weak, joblessness to curb consumer demand
* Car-scrap schemes divert consumer spending
* Sales rebound in Spain, weak in Germany
(Updates with quotes, details)
By Marcin Grajewski
BRUSSELS, Oct 5 (Reuters) - Euro zone retail sales fell less than expected month-on-month in August as a rebound in the food sector lent support, data showed, in a signal consumer demand may be benefitting slightly from a nascent economic recovery.
Retail sales in the 16-country area fell 0.2 percent against July and dropped 2.6 percent year-on-year, European Union statistics office Eurostat said on Monday.
Economists polled by Reuters had expected a 0.5 percent fall versus the previous month, while the annual decrease came in line with their forecasts.
"In general, these figures confirm moderate signs of stabilisation in consumer spending," said Giada Giani, analyst at Citigroup.
But the figure was too weak to suggest any big role for consumers in an expected economic revival in the third quarter. Growth would instead depend mostly on government spending as tens of billions of euros are being pumped into the economy.
"The presumed recovery in GDP (gross domestic product) in the third quarter is unlikely to be consumer-led," said Martin van Vliet, analyst at ING.
The data comes as the European Central Bank is expected to keep its main interest rate at 1.0 percent this week amid signs the worst European recession since World War Two may be ending.
Analysts expect the euro zone's economy to have started growing in the third quarter of 2009 after it contracted by 0.1 percent quarter-on-quarter in the April-June period.
But expansion is likely to be limited due to growing unemployment, which hit a 10-year high in August at 9.6 percent.
"Concerns about income and job prospects will probably continue to act as a restraining force on high street spending. However, the recent upturn in consumer confidence would seem to point to some modest improvement in retail sales over the coming months," van Vliet said.
In Spain, among the hardest-hit by the crisis in the euro zone, monthly sales rebounded by 1.4 percent. In Germany, the euro zone's biggest economy, sales fell 1.5 percent.
END OF CAR-SCRAPPING SCHEMES
Economists say retail sales figures have been affected by government cash incentives to change old cars for new ones.
Those payouts may have diverted household funds from smaller-ticket items, negatively affecting retail sales, which do not include car purchases.
The car-scrapping programmes are now coming to an end, with Germany having wrapped up its own on Sept. 2.
"It is likely that the retail sales data modestly understate the current strength of consumer spending in the euro zone as they do not include car sales which have been lifted substantially in a number of countries by 'cash for clunkers' schemes," said Howard Archer, analyst at IHS Global Insight.
Eurostat said sales of food, drinks and tobacco increased by 0.5 percent against July after falling for three months in a row. In annual terms, they dropped 1.3 percent.
Non-food products fell 0.6 percent and 3.2 percent respectively.
In the whole 27-country European Union, retail sales fell 0.3 percent on the month and 1.8 percent year-on-year. (Editing by Dale Hudson)