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German growth slows as expected in third quarter

BERLIN (Reuters) - German economic growth slowed further in the third quarter, in line with expectations, preliminary data from the Statistics Office showed on Thursday, as the euro zone crisis sapped the vitality out of Europe's largest economy.

Gross domestic product grew 0.2 percent in seasonally adjusted terms in the July-September period, hitting the median in a Reuters poll of 50 economists. Expectations had ranged from -0.4 percent to +0.5 percent.

"That was the last good number from Germany for the time being. The German economy will probably shrink somewhat in the fourth quarter given that orders have been falling for the last year and the business climate, as measured by Ifo, has recently caved in," said Commerzbank chief economist Joerg Kraemer.

"That is due to uncertainty caused by the euro zone crisis."

Until this year, Germany escaped the euro zone's troubles largely unscathed, growing by a record 4.2 percent in 2010 and by 3 percent last year even as other euro zone states were in recession and sought bailouts.

But recent data has shown even Europe's economic powerhouse is taking a knock. The private sector is shrinking, sentiment surveys sinking, unemployment rising and industry orders tumbling.

Many economists expect the economy to contract in the fourth quarter for the first time since the end of 2011, though healthy consumer appetite and a robust jobs market should help Germany to avoid a recession, defined as two quarters of contraction.

"Positive impetus came from abroad compared with the previous quarter," the Statistics Office said in a statement. "According to preliminary estimates, exports of goods and services climbed more than imports. There were, however, mixed signals from within Germany."

Public and private consumption rose more than in the second quarter and investment in construction also increased, almost compensating for a fresh decline in equipment investment and a reduction in order backlogs, the office said.

Preliminary data also showed growth slowed to 0.4 percent from the same quarter a year ago in unadjusted terms, down from 0.5 percent in the second quarter.

Euro zone growth data due at 5 a.m EDT is expected to show the 17-state currency bloc as a whole shrank by 0.2 percent in the third quarter.

(Reporting by Michelle Martin, Madeline Chambers and Annika Breidthardt)

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