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UPDATE 2-German export leap likely to cushion Q3 slowdown

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By Michelle Martin

BERLIN, Oct 8 (Reuters) - German exports rose unexpectedly in August, underscoring the continued resilience of Europe's largest and traditionally export-oriented economy despite the euro zone crisis and suggesting a third quarter slowdown may be moderate.

Seasonally adjusted exports jumped 2.4 percent month-on-month, far outperforming expectations for a drop of 0.5 percent and beating even the highest forecast in a Reuters poll of 17 economists for a 0.5 percent rise.

"It is incredible how German exports are winning in such a tough environment," said Andreas Scheuerle at DekaBank.

"The strongest areas of growth recently came from Asia and Europe outside the euro zone. The data should influence Germany's economic output positively in the third quarter."

Germany's economy quickly bounced back from the global financial crisis in 2008/9 and for a long time seemed impervious to the euro zone's troubles but growth slowed to 0.3 percent in the second quarter from 0.5 percent in the first as firms held back on investments due to uncertainty in the 17-nation bloc.

Many economists now predict a German contraction in the third and possibly fourth quarters, though they said Monday's foreign trade data would help cushion the slowdown in the third quarter.

Imports inched up a mere 0.3 percent, raising questions about the level of domestic demand in Germany, which many economists had expected would prop up growth during the euro zone crisis and a global economic slowdown.

But the figures chime with data last week which showed industrial orders dropped in August as a slide in domestic demand outweighed an improvement in euro zone contracts.

The seasonally-adjusted trade surplus widened to 18.3 billion euros from an upwardly revised 16.3 billion euros in July. The consensus forecast was for it to narrow to 15.3 billion euros.

STABILISING

A breakdown of data showed that imports from the euro zone climbed by 1.1 percent on the year in August, compared with a more muted 0.4 percent overall year-on-year rise in imports and a 0.4 percent drop in shipments to non-euro zone countries in the European Union.

The data also showed that Germany found it harder to find buyers for its goods in the euro zone in August compared with a year ago, with shipments to countries in the troubled bloc down some 3.1 percent as several governments implement harsh austerity measures.

But Germany found buyers outside the European Union, with exports to other markets up by 13 percent on the year.

Some economists, however, warned that the increase in exports was just a one-off effect.

"The trend for the coming months points rather to a weakening," said Ulrike Kastens at Sal Oppenheim.

"Nevertheless the increase in exports in August should have a stabilising effect on economic performance in the third quarter."

Recent data from Europe's growth engine and paymaster has been rather mixed, with business sentiment slipping, the private sector contracting and unemployment rising, but consumer sentiment has held steady and retail sales have edged up.

Purchasing managers's surveys last week showed the manufacturing and services sectors shrinking, with business sentiment among service providers sliding to its lowest level in 3-1/2 years.

Data due out later on Monday is expected to show that German industrial output fell by 0.8 percent on the month in August.

(Reporting By Michelle Martin and Stephen Brown, editing by Gareth Jones)

((sarah.marsh@thomsonreuters.com)(+ 49 30 2888 5226))

Keywords: GERMANY ECONOMY/