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UPDATE 2-Norway business activity rebounds, outlook uncertain

* After March lockdown, sentiment rose from May to Aug

* Outlook depends significantly on COVID-19 development

* Investment plans cut further since May

* Currency strengthens vs euro (Adds quote, currency, background, analyst)

OSLO, Sept 15 (Reuters) - Norwegian business activity rose between May and August as measures to contain the coronavirus outbreak were relaxed, but the outlook remains uncertain and investments are set to decline, a central bank business survey showed on Tuesday.

The sentiment review is the last major domestic data release ahead of Norges Bank’s Sept. 24 monetary policy meeting.

“A substantial rebound in retail trade and household services in particular is boosting growth, although growth was also reported in construction, domestically-oriented manufacturing and commercial services,” the central bank said.

Uncertainty remains unusually high, the survey showed, and business leaders expect coronavirus infection rates and containment measures to determine the way forward.

“Enterprises expect low activity growth over the next six months,” Norges Bank said.

Seeking to suppress the COVID-19 pandemic, Norway in March shut schools, kindergartens and many private services, triggering a surge in unemployment.

While restrictions were gradually lifted, and unemployment declined, the government has recently put further easing on hold as the rate of virus transmission increased, warning it may be forced to bring back tougher measures.

“Investment plans have been revised down further since the previous survey (in May) and enterprises expect a substantial fall in investment in the coming year,” Norges Bank said.

The central bank cut interest rates three time between March and May to zero percent from a pre-pandemic 1.5% and has said a hike is likely to be more than two years away, although some analysts predict an earlier rise.

The Norwegian crown currency strengthened to 10.71 against the euro at 0842 GMT from 10.73 just ahead of the 0800 GMT data release.

“All told, growth expectations vary a lot across the different sectors, but the general impression is that the overall growth rate will be fairly weak from this stage,” Handelsbanken Capital Markets wrote in a note to clients. (Reporting by Terje Solsvik, editing by Gwladys Fouche, Kirsten Donovan)