GERMANY'S economy grew strongly in the third quarter of the year, according to the latest official figures, but analysts said there was still scope for an interest rate cut, bond market gains and a weaker deutschmark.

Adjusted figures published by the Bundesbank showed that third quarter gross domestic product (GDP) rose by 0.8 per cent against the second quarter.

Year on year growth in pan German GDP accelerated to 1.9 per cent from 1.1 per cent, according to Bundesbank data which were revised slightly down from numbers released initially by the Federal Statistics Office.

The GDP number came in towards the top end of market expectations, initially pushing the D mark up a pfennig against the dollar before the German currency eased back. "The rise ... might suggest that the German recovery is now very much on track, HSBC analyst Mr Stephen King said.