(BRUSSELS) - European economic growth rebounded in the third quarter despite financial market swings and the record strength of the euro and oil prices, an official EU estimate released on Wednesday showed.

After a second-quarter soft spot, economic growth in the 13 nations sharing the single currency accelerated in the three months through September to 0.7 percent over one quarter and 2.6 percent over one year.

The result marked an improvement from the second quarter, when eurozone gross domestic product (GDP) grew only 0.3 percent over one quarter and 2.5 percent over one year, the European Union's Eurostat data agency said.

The third quarter figures, which were adjusted for seasonal variations, marginally exceeded economists' forecasts for growth of 0.6 percent over one quarter and 2.5 percent over the year.

Meanwhile, the 27-nation EU economy also picked up in the period with growth of 0.8 percent over one quarter and 2.9 percent over one year.

"Eurozone GDP growth rebounded well in the third quarter, following a marked slowdown in the second quarter," Global Insight economist Howard Archer said.

"Growth appears to have been led by a renewed strengthening in business investment after it faltered in the second quarter, while consumer spending was probably relatively solid," he added.

Europe saw faster growth across most of its major economies with regional powerhouse Germany expanding 0.7 percent and 2.5 percent over one year, and France growing 0.7 percent and 2.1 percent over 12 months.

European economic growth gained speed in the third quarter even though financial markets saw extreme volatility over concerns about the US housing market while credit crunch emerged as lenders became reluctant to lend.

On top of that, the euro and oil price rose to all-time highs in the period, casting a growing pall over the Europe's economic outlook.

The European Commission warned on Friday that European economic growth would be weaker than previously expected next year, because of nerve-wracked financial markets, a relentless rise in oil prices and a weakening US economy.

In an autumn update of its economic forecasts, the EU's executive arm cut its 2008 eurozone growth estimate to 2.2 percent from the 2.5 percent projected in May.

However, economist Jonathan Loynes at Capital Economics said that the strong third quarter growth helped put the likely slowdown ahead in a more positive perspective.

"The strong gain in eurozone GDP in third quarter provides some reassurance that a likely slowdown in growth in the region over the coming quarters will begin from a pretty solid starting point," he said.

But Bank of America economist Gilles Moec was more cautious, warning that Europe still faced a growing list of headwinds.

"A stronger euro coupled with slower demand from the US will likely weigh on net exports," he said.

"At the same time, consumer spending will probably be noticeably held back by the impact of higher oil prices on consumers' purchasing power," Moec added.

"Investment, especially in residential construction, could be hindered by tighter credit standards, in response to the recent financial market turmoil."

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