* Unemployment rate falls for 1st time since May 2008
* Retail sales, real wages fall less than expected
* Path to recovery expected to be long
(Adds market reaction, analyst quotes)
By Toni Vorobyova
MOSCOW, June 19 (Reuters) - Russia's jobless rate unexpectedly fell for the first time in a year in May, data showed on Friday, in a sign that the country's first recession in a decade may have reached bottom.
Some 200,000 Russians found work last month, taking the unemployment rate down to 9.9 percent from April's 9-year high of 10.2 percent. Economists' consensus forecast was 10.3 percent.
Investors have been looking for green shoots in the Russian economy, which has fallen prey to lower oil prices while the global slowdown has reduced demand for its commodities. The credit crunch has left companies struggling to refinance their foreign loans secured in better days.
"There is some ground for optimism," said Yaroslav Lissovolik, chief strategist at Deutsche Bank in Moscow.
"If the oil prices hold at current levels, I think we can hope that the peak (of the slowdown) has been passed."
News of output and job cuts from companies has largely dried up in the last couple of months, with most sticking by their already announced anti-crisis plans.
NOT OUT OF THE WOODS YET
However, any path towards a recovery will be long, with economic growth not expected to return until 2010 and real disposable incomes falling in May.
In a sign that the $1.7 trillion economy is not out of the woods yet, data earlier this week showed industrial output contracted a record 17.1 percent year-on-year in May, and wage arrears were at their highest since late 2005.
"Data from industrial output and a rising number of workers being affected by wage arrears suggest that the economy will only come out of this crisis very gradually," said Lars Rasmussen, analyst at Danske Bank.
Despite the improvement in the last month, Russia now has 3 million more unemployed than before the crisis hit last autumn, while many more have faced cuts in salaries and working hours.
Capital investment shrank 23.1 percent in year-on-year terms, its worst performance in over a decade, although in month-on-month terms there was an improvement.
Retail sales shrank for the fourth month, with contraction accelerating to 5.6 percent year-on-year. But the slump in retail sales was smaller than analysts had expected, and the same was true for real wages.
The new jobs would be welcome news for Russian leaders, who have faced the crisis after an oil-fuelled boom.
This month Prime Minister Vladimir Putin publicly humiliated metals tycoon Oleg Deripaska after hungry workers from the town of Pikalyovo blocked a motorway in protest over unpaid wages.
For the country as a whole protests have so far been limited in scale, with opinion polls still showing majority support for Putin and President Dmitry Medvedev. But experts warn that unrest could intensify if wage arrears and unemployment deteriorate.
Russia's MICEX stocks index slightly pared losses after the data, to trade 0.2 percent lower at 1104 GMT. The rouble held on to earlier gains versus a euro-dollar basket. (Editing by Andy Bruce)