Brazil industry growth slows in March but still beats forecasts

SAO PAULO, May 7 (Reuters) - Industrial production in Brazil slowed in March from February, but still exceeded market expectations, government statistics agency IBGE said on Thursday.

* Production rose 0.1% in the period, up for the third consecutive month but slowing from February's 0.9% increase

* The median estimate in a Reuters poll projected a 0.2% drop

* Output expanded across all four main categories surveyed, IBGE said

* On a yearly basis, industrial production rose 4.3% in March, above the 3.5% increase expected by economists in a Reuters poll

* Industrial activity growth is likely to stay modest in coming quarters as momentum looks fragile, said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics

* "Recent rate cuts appear to be helping sentiment at the margin, but not enough to generate a stronger acceleration in activity, particularly in manufacturing," he said

* Brazil's central bank last week trimmed its benchmark rate to 14.50%, delivering a second consecutive 25-basis-point cut (Reporting by Camila Moreira and Gabriel Araujo; Editing by Toby Chopra)