UPDATE 1-Japan June crude steel output down 33.6 pct vs yr ago

* Output down 33.6 pct yr/yr, up 6.3 pct mth/mth

* Marks 9th straight yr/yr fall, 2nd straight mth/mth gain

* Nippon Steel shares up 4.2 pct, JFE up 5.8 pct (Updates with background, details)

TOKYO, July 21 (Reuters) - Japan's crude steel output dropped by a third in June from a year earlier to mark the ninth straight month of falls, but it picked up slightly from May in a sign the industry is gradually recovering.

Output from Nippon Steel Corp (5401.T) and other Japanese steelmakers was 6.89 million tonnes in June, down 33.6 percent from the same month a year earlier, but up 6.3 percent from May, the Japan Iron and Steel Federation said on Tuesday.

Steelmakers worldwide have taken a beating this year as the global economic slowdown sliced into demand and prices. Steel firms have been forced to run factories at low capacity levels, shelve investment plans and cut staff.

The Japan output data, which marked the second consecutive month-on-month gain, comes as the latest sign the industry is slowly recovering from its worst downturn since World War 2.

For a graphic on Japan's steel output, click: here

Nippon Steel, the world's second-largest steelmaker and Japan's biggest, said last week that it would resume operations at a factory in southern Japan to meet recovering demand from automakers and other clients. [ID:nT59738]

Nippon Steel also said its crude steel output would likely jump 40 percent in July-September from the previous quarter to over 6.5 million tonnes, bringing production to nearly 80 percent of levels a year earlier.

Data released by the World Steel Association on Monday showed that global crude steel output fell 16 percent year-on-year to 99.8 million tonnes in June. The association represents around 85 percent of the world's total steel producers. [ID:nLK121993]

The drop was at a slower pace than in June, although analysts said most of the new production was in China for re-stocking efforts and not indicative of a strong recovery.

Shares of Nippon Steel were up 4.2 percent in late afternoon trade, outperforming a 2.5 percent gain in the benchmark Nikkei average .N225. JFE Holdings (5411.T), Japan's second-biggest steelmaker, gained 5.8 percent to 3,080 yen. (Reporting by Ritsuko Shimizu and Nathan Layne; Editing by Ben Tan)