German output raises euro recovery hopes

By Brian Rohan

BERLIN (Reuters) - German industrial output grew at its fastest rate since reunification in the third quarter, and exports rose for the fourth time in five months, showing the euro zone should have a faster bounce out of recession in the third quarter.

A flash estimate of German gross domestic product (GDP) is due out on Friday. Economists polled last week had forecast it would expand 0.8 percent in the third quarter, but Monday's data suggest the prediction may have been too cautious.

It also pointed to the euro zone having emerged strongly from recession in the third quarter -- ahead of official data on the 16-member currency area due on Friday. Analysts forecast the zone to have grown 0.5 pct in quarterly terms.

"Germany's weight in the euro zone means that now it could show higher growth than previously expected," said Christoph Weil, an economist at Commerzbank in Frankfurt.

"If tomorrow's industry output figures from France and Italy surprise on the upside we will surely see 0.6 percent euro zone growth in the third quarter," he added.

Industrial output in Germany -- which accounts for about 30 percent of the euro zone economy -- rose a monthly 2.7 percent shooting past the consensus forecast for a 1.0 percent gain.

On the quarter, it rose 3.5 percent. Reuters calculations -- also confirmed by analysts -- showed that was the largest quarterly jump since Germany reunited in 1990. Monday marked the 20th anniversary of the fall of the Berlin Wall.

TOUGH 2010