* Iceland GDP shrinks 7.2 pct yr/yr in Q3
* Economy contracts 5.7 pct in Q3 vs Q2
* Q2 GDP data revised to show smaller fall
(Adds detail, background)
STOCKHOLM, Dec 7 Iceland's gross domestic
product (GDP) shrank 5.7 percent in the third quarter from the
second for an annual contraction of 7.2 percent as the island's
financial meltdown pummelled the economy, data showed on Monday.
The North Atlantic island nation was plunged into its worst
ever economic crisis last year as its main banks, heavily
indebted after years of overseas expansion, all collapsed.
The fall of Kaupthing, Landsbanki and Glitnir also laid low
the Icelandic currency and forced the government to turn to the
International Monetary Fund (IMF) and its European neighbours
for billions of dollars worth of aid to ride out the storm.
The financial meltdown has also laid waste the broader
economy, triggering bankruptcies and sending the jobless rate,
virtually zero before the crisis, surging toward double digits.
While economies across the world move toward recovery on the
back of massive stimulus measures rolled out by governments and
central banks, Iceland's economy is expected to contract further
next year, the OECD forecast last month. [ID:nLI434859]
Iceland's government said in October the economy would
contract 8.4 percent this year as the effects of last year's
economic meltdown linger, with growth not returning until 2011.
The Statistics Office said second quarter GDP was revised to
show a 6.2 percent year-on-year contraction after an initially
reported 6.5 percent fall.
On a quarterly basis, the figure was revised to a 0.4
percent contraction from the 2.0 percent decline initially
(Reporting by Mia Shanley and Niklas Pollard, editing by Mike