LEAD: German output posts small rise amid hopes for economy By Andrew McCathie, dpa

Eds: Adds details from production report, analysts, background

Berlin (dpa) - Industrial production rose a modest 0.2 per cent in November, the Ministry of Economics said, amid hopes that Europe‘s biggest economy will regain momentum.

Analysts had expected the data would show output rebound to 1 per cent after it contracted by 2 per cent in October as economic growth slowed late last year.

The modest but less-than-forecast gain in production brought to an end three consecutive monthly falls.

The increase also came after rises in output in both the building and core manufacturing sectors largely failed to offset sharp slumps in production in consumer goods and energy.

The new figures followed the publication Tuesday of data showing factory order books and exports falling more than forecast in November.

The 1.8-per-cent drop in orders came after a sharp drop in foreign demand outweighed a solid 1.3-per-cent gain in domestic orders.

Many economists believe the German gross domestic product (GDP) contracted in the final quarter of 2012 after the eurozone‘s debt undercut growth performance.

"Output in October and November averaged about 3 per cent less than in the third quarter," said Commerzbank economist Ulrike Rondorf. "We now expect GDP contracted by 0.4 per cent in the fourth quarter."

Still, the key industrial branches have entered the new year on a cautiously optimistic note.

Economists expect growth to pick up after a weak start to 2013 with a rebound in trade and higher consumer demand helping to power economic growth during the second half.

"Companies expect - albeit in small steps - that 2013 will record a pickup", said Anton Boerner, the president of Germany‘s leading foreign trade association on Wednesday.

The building industry said it expects its members to report a nominal 2-per-cent rise in turnover this year, helped by a strong performance of the residential construction sector.

The Berlin-based German Institute for Economics Research (DIW) said Wednesday it sees the nation‘s economy growing by 0.9 per cent this year before accelerating to more than 2 per cent in 2014.

The German economy was likely to have expanded by 0.8 per cent last year, DIW said.

"The economic development in Germany is still significantly stronger than the rest of the currency bloc although weak demand from neighboring countries such as France and the Netherlands is currently acting as a drag on the German economy," said DIW economist Ferdinand Fichtner.

Releasing the latest production data, the Ministry of Economics warned that fourth-quarter production would be lower than in the third quarter.

"The development of industrial orders along with the modest pickup in economic sentiment indicators point to more favourable conditions for production this year," the ministry said. dpa amc jln