Sept 6 Reuters German industrial production fell more than expected in July, driven mainly by weak activity in the automotive sector, spurring fears that Europe39;s largest economy could contract again in the third quarter.

Production fell by 2.4 compared with the previous month, the federal statistics office said on Friday. Analysts polled by Reuters had predicted a 0.3 fall.

Fridays data is a cold shower for everyone hoping for a speedy recovery. In fact, it suggests that the bottoming out of industry still has a long way to go, said Carsten Brzeski, ING39;s global head of macro.

The recent weakening of sentiment indicators also suggests that there will be no rapid turnaround for the better, Commerzbank39;s senior economist Ralph Solveen said.

There is a growing risk that the German economy will continue to contract slightly in the third quarter, Solveen said.

Production dropped by 8.1 in the automotive industry, weighing on the overall result. In June, automotive production rose 7.9.

On a less volatile three month on three month comparison, production in MayJuly fell 2.7 compared with the FebruaryApril period.

Weakness in German industry is one of the main reasons why we expect the German economy will broadly stagnate in the rest of this year, said Franziska Palmas, senior Europe economist at Capital Economics.

The statistics office revised the figure for June to a 1.7 increase on the month from 1.4 previously.

Despite the upward revision, the slide in…