WRAPUP 3-Chile Feb industry falls vs Jan,copper output dives

 * Industry falls vs Jan on slump in manufacturing
 * Copper down sharply on lower ore grades, mill problems
 * Finance Minister sees strong March, Q1, no overheating
 * Reuters poll sees slower IMACEC Feb economic growth
 (Adds Finance Minister comment, Reuters poll)
 By Antonio de la Jara and Moises Avila
 SANTIAGO, March 30 (Reuters) - Chile's industrial
production (CLIP=ECI: Quote, Profile, Research) fell in February compared with January
and posted its weakest annual growth rate in months, according
to government data which prompted more bets the central bank
will scale back interest rate hikes.
 Copper output, the backbone of Chile's exports, also
plunged in February compared with a year earlier, on lower ore
grades and mill problems, the government statistics agency INE
said on Wednesday.
 Industrial output fell a seasonally-adjusted 1.1 percent in
February from January and rose a much lower-than-expected 1.9
percent compared with the same month last year, its slowest
annual pace since October. Market expectations had pointed to a
4.5 percent increase from a year ago. For a preview, see
[ID:nN28209105]
 It was the second straight month-on-month fall in
industrial production. The INE reported last month that
seasonally adjusted industry output fell 0.5 percent in January
from December and rose a lower-than-expected 4 percent from a
year earlier. [ID:nN28250708]
 "We have a drop in dynamism of the industrial sector and in
mining output, but we also see a continuous recovery in the
construction sector," Finance Minister Felipe Larrain said,
citing isolated factors like food due to an apparent drawdown
of inventories.
 "We are going to see some very positive figures in March
... and a strong quarter," Larrain added. "(But) we are not
overheating. Investment remains strong."
 Chile's peso was stable following the data, but traders
said the weaker-than-expected output figure supported a bias in
interest rate futures towards signaling a 25 basis point
increase at next month's rate-setting meeting rather than a
more aggressive 50 basis points the market is expecting to tame
inflation. [ID:nN23232413] [ID:nN17171992]
 "While internal and external demand continue to be
favorable, manufacturing grew at a slower pace than in previous
months," state statistics agency INE said, referring to the
year-on-year data..
 "Mining shows a fall, and construction does not yet show
clear signs of recovery," it added.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
> For full coverage, please click on       [ID:nN30113748]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 However, INE also reported a 16.8 percent surge in Chilean
retail sales and a 10.7 percent jump in supermarket sales in
February, compared with a year earlier.
 Taken together, the downbeat production data outweighed the
upbeat statistical sales figures in terms of economic growth
projections, in the view of Bice Inversiones, a Santiago-based
brokerage.
 Bice said it was was lowering its estimate for Chile's
overall economic growth for February, as gauged by the central
bank's IMACEC figure. The IMACEC, which measures about about 90
percent of economic activity, is due to be released for
February on April 5.
 "Despite the favorable evolution of consumption indicators,
the performance of industry and mining lead us to revise down
our Imacec economic activity forecast for February to a 5.8
percent year on year increase," BICE said in a note.
 Chile's economic activity is seen rising 5.8 percent in
February, lower than earlier market estimates, in light of the
February output data. [ID:nN30150958], according to the median
forecast of 14 analysts and economists surveyed in a Reuters
poll.
 Before Wednesday's release of the INE data, the market had
been expecting a 6.8 percent IMACEC figure for February, in
line with January's pace. [ID:nSGO002160].
 Chile's copper output (CLCOPP=ECI: Quote, Profile, Research) fell 6.6 percent in
February compared with a year earlier to 368,243 tonnes, the
INE said.
 Chile, which holds by far the world's top copper reserves
and is the globe's No.1 producer, is expected to steadily
increase output in the next two years on new mine projects and
upgrades.
 For the INE's report on February industrial and mining
output, please go to:
http://www.ine.cl/filenews/files/2011/marzo/pdf/sect-xwtk.pdf
 ( Writing by Simon Gardner, Editing by W Simon)


WRAPUP 3-Chile Feb industry falls vs Jan,copper output dives