By Joe Cash and Kevin Yao

BEIJING (Reuters) -China's factory output slowed for a third straight month in July, showing the recovery in the world's second-largest economy was losing steam, although the battered consumer sector perked up slightly as stimulus targeting households took effect.

A mixed batch of data on Thursday pointed to a patchy start to the second half for the $19 trillion economy and gave policymakers continued cause for concern following dismal export, prices and bank lending indicators earlier this month.

Data from the National Bureau of Statistics (NBS) showed industrial output grew 5.1% from a year earlier, slowing from the 5.3% pace in June and below analysts' forecasts for a 5.2% increase.

In contrast, retail sales rose 2.7% in July, quickening from a 2.0% increase in June and beating expectations for growth of 2.6%.

Overall, analysts say the data steps up the urgency for policymakers to roll out more support measures aimed at consumers instead of pouring funds into infrastructure.

"Economic momentum appears to have stabilised somewhat last month, with a pick-up in consumer spending and servicing activity largely offsetting a slowdown in investment and industrial production," said Julian Evans-Pritchard, head of China economics at Capital Economics.

"With the government ramping up policy support, we think a modest recovery could take hold over the coming months."

Chinese leaders last month signalled they would give greater consideration to a new economic playbook and focus stimulus at consumers rather than infrastructure and manufacturing.

The state planner last month said about 150 billion yuan ($20.97 billion) raised through special debt issuance this year would subsidise a consumer goods trade-in programme.

"Consumer demand continued to recover, as policies to expand domestic demand and promote consumption gained traction," said Liu Aihua, an NBS spokesperson.

NO RESPITE

Weighing heavily on consumer spending has been a bruising slump in the property sector over the past three years.

With 70% of Chinese household wealth held in real estate, a sector that at its peak accounted for a quarter of the economy, consumers have kept their wallets shut tight.

There were few signs of prospects improving with separate data on Thursday showing China's new home prices fell at the fastest pace in nine years in July, as supportive policies failed to restore confidence in the struggling sector.

Further signs of depressed demand were evident in the Asian giant's commodities usage with China's oil refinery output for the month down 6.1% from a year earlier and crude steel output falling for a second month.