* Exports down 4.2 pct when adjusted for working days
* EU is biggest trading partner, trade with EU falls
* Watch sales fall for second time in 2012 (Adds analyst, details)
ZURICH, Feb 5 (Reuters) - Swiss exports fell in December, data showed on Tuesday, dragged down by weak demand from the country's top trading partner Europe.
Exports adjusted for the number of working days fell by 4.2 percent to 14.049 billion Swiss francs ($15.46 billion), the Federal Customs Office said on Tuesday.
Unadjusted sales of goods to Europe dropped 10.2 percent, while sales to Asia fell 8.6 percent.
"We've seen a net decline but, of course, the month had two working days less," said Alessandro Bee, an economist at Sarasin. "Adjusted for this, there was still a drop but not as strong. This reflects the recession in Europe."
Exporters have benefited from the Swiss National Bank's cap of 1.20 francs per euro in place since September 2011, but they have also faced headwinds from weak demand in the neighbouring euro zone as the region's debt crisis hit confidence and output.
Swiss exports to China tumbled 24.9 percent with sales of watches down 9 percent to 1.767 billion francs, the second decline of the year after a dip in September.
Richemont, the maker of Cartier watches and Montblanc pens, said last month that sales had ground to a halt in the Asia-Pacific region in the fourth quarter.
But the Swiss Watch Industry Federation described the dips as "one-off fluctuations," while Swatch Group said on Monday it was optimistic about 2013 after enjoying healthy growth in January.
Despite the drop in overall exports in December, other recent data suggests the Swiss economy may have emerged from a trough since the start of the year.
Swiss manufacturing activity expanded for the first time in 17 months in January, while investor sentiment showed a further improvement last month.
"Manufacturers are focused on exports: if they see the future in a positive light that will show in exports. The first half of 2013 should bring an improvement," said Sarasin's Bee.
Rising confidence that the euro zone is beginning to shake off its sovereign debt crisis saw the franc weaken in January, providing some cheer for exporters who have long complained the cap was set too high, eroding their margins.
Still, the franc remains some 30 percent stronger than it was before the financial crisis erupted in 2008 and Switzerland's finance minister has said it remains overvalued.
Overall, Switzerland ran a merchandise trade surplus of 1 billion Swiss francs in December.
($1 = 0.9086 Swiss francs) (Additional reporting by Silke Koltrowitz; Editing by John Stonestreet)