BEIJING (Reuters) - China's growth ebbed in the third quarter while inflation edged just a touch higher, showing that the world's second-largest economy was strong but far from overheating and suggesting that an interest rate rise this week may be enough for now.

Coming a day ahead of a meeting of G20 finance ministers in South Korea, where the United States and others are expected to push for a stronger Chinese currency, the data could in fact lead Beijing to put appreciation back in the slow lane.

"The window for large yuan gains is closing fast. Export growth is slowing and, assuming the current trend is sustained, year-ago growth is on track to fall well below 10 percent," said Ben Simpfendorfer, an economist with RBS in Hong Kong.

Although the suite of data published yesterday was broadly in line with forecasts, the numbers in fact were something of a downside surprise after market chatter that growth and inflation had been much stronger than expected, prompting the surprise rate increase. "Chinese officials are likely feeling quite pleased with the way the data are playing out," said Brian Jackson, an economist with Royal Bank of Canada, in Hong Kong.

"Policy measures put in place earlier this year appear to have helped steer the Chinese economy through a middle course between overheating and a serious downturn."

Financial markets were largely unmoved by the data.

Economic growth dipped to 9.6 percent in the third quarter from a year earlier, down from 10.3 percent in the second quarter, according to the National Bureau of Statistics. The consensus expectation was a 9.5 percent pace.

Much of the slowdown can be explained by a higher base of comparison after China's rebound last year from the global financial crisis. It also is a desired outcome for the government, which has gradually withdrawn the monetary and fiscal stimulus that powered the recovery.

Inflation rose in September to 3.6 percent, reaching a 23-month high and smack in line with forecasts.

But industrial output — a key indicator of growth momentum — slowed to a 13.3 percent year-on-year increase, its lowest in 13 months and missing forecasts of a 13.6 percent rise.

China surprised markets with its increase of interest rates on Tuesday, its first in nearly three years and an attempt to cool asset markets. With price pressures still mild, many analysts said it could afford to wait until next year to gauge the impact of higher rates before hiking them a second time.

"The GDP figure gave the central bank confidence to raise interest rates," said Nie Wen, an economist with Fortune Trust in Shanghai.

"But most other countries are now implementing loose monetary policies, like the United States, so it is not good for China to raise interest rates again," he said.