By Al-Zaquan Amer Hamzah

KUALA LUMPUR, Feb 8 (Reuters) - Malaysia's exports and imports suffered their worst year-on-year fall in December since late 2009, reflecting the uneven nature of economic recoveries in its key overseas markets.

Factory output for the month also fell more than expected, but analysts said domestic demand that has propped up growth remained strong.

The trade-dependent country's exports fell 5.8 percent year on year, with shipments to the United States falling the most, followed by China.

Total imports dropped 6.5 percent in December over the previous year.

'The export numbers were weaker than expected. This was largely due to the sharp fall in electrical components and electronics and weaker commodity prices in December also played a key role,' said ANZ analyst Daniel Wilson.

The weak trade activity fell far short of a Reuters poll that had forecast 1.4 percent export growth in December and 1.5 percent import growth.

Malaysia's economy has been kept afloat by domestic demand, supported by robust private consumption and investment activities ahead of general elections that must be called by end-April.

The economy kept up its surprisingly robust growth in the third quarter of 2012, beating expectations with an annual expansion of 5.2 percent.

Factory output for December, as measured by the Industrial Production Index fell short of expectations, government data showed on Friday, rising 3.7 percent against a Reuters poll of 6.3 percent.

Wilson said the lower factory output figure was tied to weaker exports.

'A shortfall in exports is normally associated to a bigger fall in IPI, but the IPI figure for December shows that domestic demand is still quite upbeat. Overall, we'll probably be revising our GDP forecast from the 5.4 percent now, but it'll remain above 5 percent.'

The central bank kept the benchmark interest rate unchanged for the tenth straight time in its first monetary policy decision for the year on January 31, saying the current level of 3.00 percent is supportive of the economy.

(Reporting by Siva Sithraputhran,; Editing by Sanjeev Miglani) Keywords: MALAYSIA ECONOMY/TRADE

(anuradha.raghu@thomsonreuters.com)(+603 2333 8040)(Reuters Messaging:)(anuradha.raghu.thomsonreuters.com@thomsonreuters.net )

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