TOPWRAP 3-German, French data boost morale; orders fall

* Euro zone industrial orders fall less than expected

* German consumer sentiment holds steady into June

* French consumer spending stronger than expected

* Norway, Sweden see unemployment rise

* Rio Tinto sets benchmark 33 pct iron ore price cut (For more on the global crisis, click [nCRISIS])

By Guy Dresser

LONDON, May 26 (Reuters) - A smaller-than-expected decrease in the euro zone's industrial orders and improved consumer sentiment in its two biggest economies offered new signs on Tuesday the worst of the recession may have passed.

Euro zone industrial new orders fell sharply in March, dropping 26.9 percent year-on-year, but this was by less in annual terms than in January and February when the falls were 34.4 percent and 34.2 percent, respectively.

"Euro zone manufacturers should increasingly benefit from the substantial destocking that has occurred in recent months as well as a possible bottoming out in global trade," said Howard Archer, economist at IHS Global Insight said. [ID:nLQ503694]

Economists also awaited U.S. consumer confidence figures, due later on Tuesday, to see whether the big jump seen in April's index was maintained in May. [ID:nN28304426]

The orders data followed news that the German GfK consumer sentiment index held steady in June for the third month. The forward-looking index, based on a survey of 2,000 Germans, showed growing worries over household finances being offset by a brighter overall outlook. [ID:nLP197790]

Spending by French shoppers on manufactured goods also came in stronger than expected in April, though analysts believe the figures were influenced by stimulus measures to encourage new car purchases and suggest growing numbers of jobless in France could start to weigh on consumption.

French national statistics office INSEE said consumer spending in April rose by 0.7 percent on March, beating median expectations for a 0.1 percent fall. [ID:nLQ132852]

Nick Kounis, Chief European Economist for Fortis Bank, said: "This is stronger than expected. A lot of it is driven by soaring car sales, but there are other areas of strength in there as well."

A detailed breakdown of first-quarter German GDP, meanwhile, showed the extent of the decline in investment and exports, with firms initially caught out by a huge drop in demand and mounting stockpiles of unwanted goods in the country's biggest economic contraction since reunification. [ID:nLQ656305]

Analysts said the figures could still mark a turning point.

"The only good thing about today's GDP numbers is that they can now be filed away. It can only get better," said Carsten Brzeski of ING Financial Markets.

"Recent indicators give hope that the worst is behind and that the free fall of the German economy is coming to an end. The German economy should stabilise in the next quarters backed by the ECB's aggressive monetary easing the government's stimulus package."

CHINESE GROWTH OVERSTATED?

The fragility of the global economy was underlined by Chinese statisticians who warned that their own monthly retail sales figures overstated China's domestic consumption. They urged Beijing to do more to encourage consumers to get out and spend.

China reported inflation-adjusted growth in retail sales of 15.9 percent in the first quarter, but officials said the indicator includes government and corporate spending and, as a result, overstated actual growth. [ID:nPEK211150]

Back in Europe, Norway's Labour Authority NAV predicted a 3.1 percent rise in annual unemployment and 4.4 percent next year. In Sweden, the jobless rate was unchanged at 8.3 percent but the numbers of hours worked fell 3.2 percent when adjusted for public holidays. [ID:nOSL010430]

Olle Holmgren of SEB said: "There isn't much that indicates that it's about to turn around. Redundancy notices have come down a little bit, but from a very high level. There are other indicators for the job market that have worsened in the last month, for example the number of new jobs."

Companies continued to grapple with ways of tackling the economic downturn. Global miner Rio Tinto Ltd (RIO.AX) (RIO.L) agreed a 33 percent cut in iron ore prices with Japan's Nippon Steel Corp, setting a tough benchmark for China's embattled steelmakers who had been looking for a bigger cut. [ID:nSP498033]

The long overdue settlement for contracts beginning from April will bring some certainty to both miners and mills, which have been in deadlocked talks as demand for both steel and its main raw material collapses in the wake of a global recession.

In North America, union leaders from General Motors GM.N expect to hear how many more jobs will be cut at the embattled automaker and German Chancellor Angela Merkel was due to meet Fiat Chief Executive Sergio Marchionne on Tuesday morning to discuss Berlin's concerns about his bid for Opel, the Ruesselsheim-based GM unit. [ID:nLQ677656]. (Writing by Jonathan Standing, Dave Graham, Brian Rohan. Editing by Hans Peters)