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Energy costs lift euro zone factory prices in September

BRUSSELS (Reuters) - Euro zone producer prices rose slightly less than expected in September, driven mainly by volatile energy costs and confirming the subdued inflationary pressures in the bloc.

Prices at factory gates in the 17 countries sharing the euro rose by 0.1 percent on the month in September after being flat in August, while the market expected a 0.2 percent rise, the European Union's statistics agency Eurostat said on Tuesday.

Compared with the same period of the last year, prices were down by 0.9 percent after a 0.8 percent drop in August, while economists polled by Reuters expected a 0.7 percent drop.

Energy producer price inflation was 0.5 percent in September, by far the largest increase of Eurostat's index.

The European Central Bank will hold its regular monthly rate-setting meeting on Thursday and a Reuters poll of 23 traders showed it will keep rates on hold this month despite a sharp fall in inflation to a nearly four-year low in October.

The European Commission said earlier on Tuesday it expected inflation to stay well below the ECB's official target of close to but below 2 percent until 2015.

(Reporting by Martin Santa; editing by Robin Emmott)