UPDATE 1-Kazakh 2012 industrial output growth hits 10-year low

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* Vital oil output falls, steel production plunges (Adds details, background)

ALMATY Jan 11 (Reuters) - Kazakhstan's industrial output grew by 0.5 percent in 2012, the lowest rise in the last 10 years, data published by the State Statistics Agency showed on Friday.

Full-year growth was slower than the 2.7 percent forecast by the government and way below a 3.5 percent rise in 2011.

Kazakhstan, a major exporter of industrial metals and grain, is Central Asia's largest economy and the second-largest post-Soviet oil producer after Russia.

Oil output shrank by 1.1 percent to 79.2 million tonnes last year, while rolled steel output dwindled by 23.6 percent to 2.4 million tonnes in the same period, according to preliminary data provided by the agency.

The country's only major steel plant in Temirtau, owned by ArcelorMittal , faced a sudden shock to demand last year when Western financial sanctions on Iran closed the door on a market that had earlier accounted for a considerable portion of its sales. (Reporting by Mariya Gordeyeva; Writing by Dmitry Solovyov. Editing by Ron Askew.)

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