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July 24 (Reuters) - Newspaper publisher Lee Enterprises Inc (LEE.N: Quote, Profile, Research) reported a lower quarterly profit that trailed market estimates, as classified advertising revenue fell 17 percent, in a further sign that weak advertising spending is addling the newspaper industry.

The relentless decline in advertising revenue continues to affect U.S. newspaper publishers as readers increasingly look to the Internet for news.

The slowdown in the U.S. economy has deepened the wounds of newspaper publishers, particularly the classified employment advertising segment.

St. Louis Post-Dispatch publisher Lee Enterprises' total classified advertising revenue fell to $73.6 million in the quarter ended June 29.

Revenue from retail advertising, its biggest advertising division, fell 3.1 percent to $108.5 million.

Third-quarter net income fell to $3.5 million, or 6 cents per share, from $22.5 million, or 49 cents per share, a year earlier.

Excluding impairment charges and other items, the company earned 28 cents a share. Revenue fell 8.3 percent to $256.4 million.

Analysts on average expected earnings of 30 cents a share, excluding exceptional items, on revenue of $264.1 million, according to Reuters Estimates. Lee shares were trading down 13 cents at $3.99 Thursday morning on the New York Stock Exchange. They had touched a low of $3.06 earlier. (Reporting by S John Tilak in Bangalore; Editing by Pratish Narayanan)