UPDATE1-US July leading economic indicators plummet 0.7 pct

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WASHINGTON, Aug 21 (Reuters) - In a sign of further U.S. economic unraveling, the index of leading U.S. economic indicators plummeted 0.7 percent in July to the lowest level in nearly four years, a private research group said on Thursday.

The Conference Board's index, a key forecasting gauge, fell to 101.2, the lowest since it was 100.7 in October 2004.

Building permits, stock prices and jobless benefit claims all weighed on the index, more than offsetting improvements in the interest rate spread and consumer expectations, the Conference Board said.

Analysts polled by Reuters had expected it to drop only 0.2 percent.

In the last six months the index has only risen once, by 0.1 percent in April. It also has fallen 0.9 percent over the same time period, the board said.

The coincident index, a measure of current economic conditions, rose 0.1 percent in July mostly due to strengthening industrial production, the board said. The lagging index shot up 0.4 percent.

Taken together, the Conference Board said, the indexes suggest "the risks for further economic weakening in the near term remain elevated." (Reporting by Lisa Lambert; Editing by Neil Stempleman)