UPDATE 2-Argentina March trade surplus doubles on controls

* Imports fall 8 pct in March, were down 1 pct in Feb

* Government trade, currency controls have impact

* Slowing economy might also play a role

* Consumer confidence shows biggest drop since Sept 2002 (Adds details on trade data, consumer confidence, analyst comment)

By Hilary Burke

BUENOS AIRES, April 23 (Reuters) - Argentina's trade surplus more than doubled in March from a year earlier as government controls that have riled trade partners succeeded in cutting imports for a second straight month, official data showed on Monday.

Last month's trade surplus totaled $1.08 billion , above the $902 million median forecast in a Reuters poll of eight local analysts. The government revised the March 2011 surplus down to $518 million.

President Cristina Fernandez has tightened controls on imports and foreign-exchange purchases since October to boost the trade surplus by reducing the volume of foreign-made goods entering the country.

Argentina pays its debts using central bank reserves, which tend to rise as the trade surplus widens. The trade surplus shrank in 2010 and again in 2011 as robust consumer demand and high inflation fueled a fast increase in imports.

In March, exports from Latin America's No. 3 economy rose 2 percent from a year earlier to $6.28 billion, buoyed by greater sales volume, particularly of industrial goods.

Export growth cooled from previous months in March, when key car shipments crashed 25.5 percent, according to private data.

At the same time, imports fell 8 percent to $5.20 billion, hit mainly by reduced volumes. Consumer good imports sank 22 percent year-on-year, capital goods dropped 21 percent, and fuel purchases from abroad fell 19 percent.

In the first quarter as a whole, the trade surplus expanded 89 percent from a year earlier to $2.97 billion. Exports grew 8 percent while imports were roughly flat.

"Import restrictions, soft commodity export revenues and a seasonal respite from energy imports are likely to continue to shore up the trade surplus," Morgan Stanley said earlier in the day in reference to the March figure.

"If we continue to see restrictions largely affecting capital and intermediate goods imports ... we may see a negative feedback loop into activity (as they hurt the supply chain) and upside risks to inflation," Morgan Stanley added.

DECELERATION

In February, imports slipped 1 percent year-on-year, falling for the first time in over two years. This reflected the impact of a new system requiring that the government pre-approve nearly all purchases of foreign-made goods.

The de facto curbs have angered trade partners. At the World Trade Organization last month, the United States, European Union, Japan and 10 other countries accused Argentina of tying up imports in red tape.

The government controls are also hurting confidence at home.

In April, consumer confidence sank 12.7 percent versus March, marking its steepest drop since September 2002, according to a monthly survey by the Torcuato Di Tella University.

A plan to seize control of the country's biggest energy company, YPF, from Spain's Repsol could damage investor sentiment.

The government specifically mentioned biodiesel exports to Spain as helping boost March's trade surplus. As a reprisal for the YPF takeover move, Spain aims to reduce its purchases of Argentine biodiesel.

The country's imports may also be falling because of an economic slowdown, which the government has pledged to soften by continuing to stoke domestic demand, which it sees as the linchpin sustaining growth.

Argentina's economy is cooling from China-like growth rates, affected by flagging factory output, inflation and declining confidence. In February, growth slowed slightly to 5.2 percent, its lowest level in more than two years.

Private analysts say the government exaggerates economic growth by as much as 3 percentage points. This is partly due to the drastic underreporting of inflation. The government reports inflation of under 10 percent a year, while independent estimates range from 20 percent to 25 percent.

On Monday, the government revised its 2011 trade surplus figure to $10.01 billion from $10.35 billion previously. (Editing by David Gregorio and Andrew Hay)