UPDATE 1-Philly Fed factory activity falls in July

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NEW YORK, July 16 (Reuters) - Factory activity in the U.S. Mid-Atlantic region contracted for the 10th consecutive month in July, a survey showed on Thursday, posting a worse than expected decline that raised questions about the speed of economic recovery.

The Philadelphia Federal Reserve Bank said its business activity index was at minus 7.5 in July versus minus 2.2 in June.

Economists polled by Reuters had forecast a reading of minus 5.0. Their 51 forecasts ranged from minus 10.8 to positive 3.0.

"This is not good news, not as good as expected," said Kurt Karl, chief U.S. economist at Swiss Re in New York.

"This is going to be a bumpy ride for the next six months for the economy."

On Wall Street, stocks weakened after the data. Government bonds, which are seen as a safe-haven investment during times of economic weakness, added to their gains.

Any reading below zero indicates contraction in the region's manufacturing sector.

The survey covers factories in a region encompassing eastern Pennsylvania, southern New Jersey and Delaware and is looked at closely as one of the first indicators of the health of the U.S. manufacturing sector.

Factories have been hit hard by the current U.S. recession, which is the worst in decades.

(Additional Reporting by Richard Leong) (Editing by Theodore d'Afflisio)