UPDATE 1-Canada July GDP growth fastest since 2004

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OTTAWA, Sept 30 (Reuters) - Canada's economy grew at its fastest monthly rate in over four years in July, advancing 0.7 percent as production of oil and natural gas surged, Statistics Canada said on Tuesday.

The robust growth shot past market forecasts of a 0.2 percent advance and followed June GDP growth of just 0.1 percent. The last time monthly GDP grew by so much was in March 2004 with growth of 1 percent.

The figure, while providing a rearview image of the economy before the global financial turmoil escalated, could help the ruling Conservatives persuade voters that they are the most capable of steering the economy through tough times as they campaign for Canada's Oct. 14 federal election.

Some economists now expect Canada's economy will slip into recession later this year due to fallout from the U.S. financial meltdown.

Statscan said output in the energy sector jumped 3.1 percent in July, accounting for almost half of the increase in July GDP. Manufacturing expanded 1.3 percent and wholesale trade gained 1.9 percent.

The goods-producing industries in general expanded 1.7 percent in the month compared to 0.3 percent growth in services-producing industries. (Reporting by Louise Egan; editing by Janet Guttsman)