The German economy expanded by a stronger-than-expected 0.9 per cent during the April-June period as robust domestic demand powered growth to the fastest rate in more than five years.
Federal Statistics Office figures released today also showed an upward revision to first-quarter growth to 0.7 per cent from 0.4 per cent. The second-quarter figure exceeded the mid-range forecast in a Reuters poll for growth of 0.8 per cent.
Euro zone government bond futures fell in early trade after the news. Analysts said the figures reinforced expectations the European Central Bank (ECB) would raise its main lending rate above the current 3.0 per cent.
"The strong growth data provide tailwind for the ECB. A rate hike at the council meeting in early October is now very, very likely," said HVB Group fixed-income strategist Kornelius Purps.
"Market expectations for another hike in December will intensify," he added.
The reading from Europe's biggest economy, the strongest since the first quarter of 2001, set the seal on a strong upswing across much of the euro zone. French GDP expanded by 1.1-1.2 per cent in the second quarter, more than double the growth rate in the first quarter.