Retail sales in the 17 countries sharing the euro fell more than expected in September from August despite some resilience in powerhouse Germany, the EU's statistics office said on Monday, reinforcing concern that the bloc's economy may be heading for a recession.

In the first negative reading since May, sales slipped 0.7 percent in September, compared to the 0.1 percent decrease forecast by a Reuters poll of economists, Eurostat said in an initial estimate. Sales in the 27-nation EU fell 0.3 percent in the same period.

Retail trade in the euro zone also fell 1.5 percent on an annual basis in September and by 0.8 percent in the EU as a whole, Eurostat said.

Germany saw a 0.4 percent increase in retail sales in Germany in September, compared to August, but there was a decline in France, where sales fell 0.6 percent.

In Spain, the single currency's fourth-largest economy, sales fell 1.7 percent as the country struggles with the highest jobless rate in the euro zone that is crimping consumer spending.

Sales of food, drinks and tobacco in the euro area in September were flat. Sales of goods other than fuel fell 0.8 percent, Eurostat said, although more detail was not immediately available.

Some economists had expected consumer spending to pick up the slack from slowing exports to support Europe's economies as the region's debt crisis and cooler demand in Asia and the United States curtail a two-year manufacturing rebound.

But Europeans are worried by the worsening economic outlook and are limiting their spending, also squeezed by inflation at 3 percent in October, fueled by energy prices and tax increases.

The European Central Bank cut interest rates by a surprise 25 basis points last week to 1.25 percent to try to boost the euro zone, but some economists still predict a recession.

Our view that the euro area would slide into recession in the current (fourth) quarter appears to be playing out, investment bank J.P. Morgan said a report, predicting a 1 percent economic contraction in the last three months of the year and a return to growth only in the fourth quarter of 2012.

(Reporting By Robin Emmott; editing by Rex Merrifield)

Germany Retail Fall