Siemens CEO sees diagnostics margin rebound in Q3

FRANKFURT, June 10 (Reuters) - German industrial company Siemens (SIEGn.DE) expects a profit margin improvement for its diagnostics business in the fiscal third quarter this year, its Chief Executive said on Wednesday.

In charts made available on the Siemens website, Peter Loescher also told an investor conference the challenging funding environment continued to affect the entire Healthcare sector, particularly in the United States.

Siemens, whose wide product portfolio -- from power plants to subway trains and hearing aids -- makes it a bellwether of Germany's economy, scaled down its group profit forecast in April as orders declined.

Its main rival in Healthcare -- which makes magnetic resonance, digital mammography and computed tomography devices -- is General Electric (GE.N). The latter has said it will invest $6 billion to make more simple and less costly equipment, such as portable ultrasound machines.

Loescher said diagnostics revenue, which had zero growth in the second quarter covering January-March, needs a boost.

He said its medical imaging business in Healthcare was "holding up well in difficult markets" and that the U.S. imaging market had not reached a trough yet.

"First signs of weakness" in the imaging business had been seen in other regions, he added.

When adjusted for positive currency effects, second-quarter revenue at the Healthcare division grew 4 percent to 2.984 billion euros, with the operating margin at imaging rising to 14.9 percent from 14.5 percent in the same period last year. Diagnostics margin was 6.2 percent from 6 percent. (Reporting by Marilyn Gerlach, editing by Will Waterman)