Swiss economy to pick up as euro zone begins to recover

* Reading contrasts with other recent economic data

* Central bank expects economy to slow after Q1 beat expectations

ZURICH, June 28 (Reuters) - Switzerland's economy will gather steam in the next six months, building on a better-than-expected first quarter performance, a leading indicator showed on Friday.

The reading contrasted with more downbeat export data from the Alpine nation and comments from the central bank, which said last week it expected the economy to weaken in the second quarter compared to the first three months of the year.

The KOF barometer, a gauge of the economy's performance in about six months' time, rose to 1.16 points in June from a revised 1.09 in May, the KOF Swiss Economic Institute said.

The reading missed average analyst expectations for 1.19 points, but KOF economists said the result strengthened the positive outlook for the Alpine economy.

"The rise is somewhat surprising given the more negative inputs we have seen from recent Swiss trade data. We are seeing the first signs of a euro zone recovery, so perhaps this is already feeding into KOF through Swiss firms drawing optimism from the euro zone," said David Marmet at Zuercher Kantonalbank.

Switzerland's economy beat even the most optimistic forecasts to grow by 0.6 percent in the first quarter, when consumers, construction and trade helped the country outperform euro zone neighbours.

But a strong currency presents a challenge to export-driven growth.

The Swiss National Bank said last week it remained sufficiently concerned about the strength of the franc and the risks it presents to the country's economy to stick to its cap on the safe-haven unit versus the euro.

The SNB put a lid on the franc in September 2011, citing the risk of deflation and recession as the strong currency squeezed exporters and the tourism industry.

Other recent data out of Switzerland have pointed to a slow recovery in economic activity. Swiss exports fell in May, with a particularly sharp decline in watches, pharmaceuticals and chemicals.

The Swiss Purchasing Managers Index due to be released next week is expected to show manufacturing expanded in June, but at a slower pace than the previous month.

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(Reporting by Alice Baghdjian and Katharina Bart; Editing by Catherine Evans)