* July flash composite PMI 55.8
* PMI points to Q3 GDP growth of 0.6 pct -Markit
* Graphics: http://tmsnrt.rs/2bkCt7Q (Adds comment, details)
By Jonathan Cable
LONDON, July 24 (Reuters) - A slowdown in euro zone business growth at the start of the second half of 2017, alongside declining inflation pressures in a key business survey, could put paid to expectations of a stimulus clawback by the European Central Bank later this year.
Years of ultra-easy policy have bolstered still-solid growth, but inflation is nowhere near the European Central Bank's 2 percent target ceiling and even shallower price rises this month will provide disappointing reading for policymakers.
Germany and France, the two largest economies in the club, missed expectations, suggesting an even more robust pace of business activity in many of the bloc's other members.
IHS Markit's Euro Zone Flash Composite Purchasing Managers' Index for July, seen as a good guide to economic growth, fell to 55.8 from June's 56.3, still comfortably above the 50 level that separates growth from contraction.
That was below median expectation in a Reuters poll for a modest dip to 56.2.
"July's fall in the euro zone Composite PMI suggests that the economy may have slowed a touch at the start of Q3, but probably maintained a decent pace," said Jack Allen at Capital Economics.
However, IHS Markit said the euro zone PMI, if maintained, pointed to third quarter GDP growth of 0.6 percent, better than the 0.4 percent predicted in a Reuters poll earlier this month. Growth in the last quarter was forecast at 0.5 percent.
PRICE PRESSURES STILL WEAK
Germany's private sector grew at a slower pace, with the weaker activity due to factory closures for summer holidays following a sustained period of strong growth. French business activity slowed more than expected to a six-month low, though manufacturing sped up.
"Confidence weakened in Germany and France, but we expect some improvement in peripheries - Italy, Spain, Ireland - driven by a rebound in services," said Apolline Menut at Barclays.
The euro hit a 23-month high on Monday against an ailing dollar, although the weaker-than-expected German business activity took some shine off. A stronger currency makes the region's exports less attractive.
Earlier on Monday, the International Monetary Fund published an upgraded forecast for the bloc, saying growth in the euro zone was now expected to be slightly stronger in 2018 and pointed to "solid momentum".
However, the output prices index fell for a second month, dipping to 51.7 from 51.8. its lowest since January. Inflation was just 1.3 percent in June, official data showed earlier this month.