UPDATE 1-Brazil car output, exports jump in January

* Exports double from yr ago, signaling overseas recovery

* Production jumps from Jan 2009, slides month-on-month (Recasts to add exports, details)

By Alberto Alerigi Jr. and Guillermo Parra-Bernal

SAO PAULO, Feb 4 (Reuters) - Automobile output in Brazil jumped in January from a year earlier, an indication that government-sponsored incentives helped propel domestic demand for new cars, the national automakers' association Anfavea said on Thursday.

Carmakers produced about 234,400 units last month, 31.6 percent more than January 2009, on sales of about 213,300 units, the association said. Production fell 3.7 percent from December 2009, after part of the government tax breaks finished.

The auto industry received massive government aid last year, with President Luiz Inacio Lula da Silva saying repeatedly that carmakers were key to helping revive output and bolster investment amid the first economic recession in 17 years.

The tax breaks, which eliminated or reduced industrial taxes on most new cars, will phase out by the end of the first quarter. Lula's policies to encourage banks to boost auto loans and stretch out payments for customers also helped fund the recovery in output.

Sales rose 8 percent from a year earlier, yet dropped 27 percent against December, a month that presented strong production and sales readings, Anfavea said.

Revenue from car exports surged 66 percent in January from the same month a year ago, while volumes more than doubled in the same period, Anfavea said. Exports fell 18 percent compared from December.

Brazil, Latin America's largest economy, is a major market for Italy's Fiat (FIA.MI), Germany's Volkswagen AG (VOWG.DE), and U.S.-based General Motors [GM.UL] and Ford Motor Co (F.N).

In January, Fiat sold 45,209 units and Volkswagen sold 39,282 units. GM sold 44,114 cars and utility vehicles, while Ford said sales reached 22,498 units in the same period.

(Reporting by Alberto Alerigi Jr.; Writing by Guillermo Parra-Bernal, editing by Dave Zimmerman)