* Q3 EBIT 1.25 bln euros, up 9.5 percent from Q2
* Beats 1.04 bln euro Thomson Reuters I/B/E/S forecast
* Says markets stabilised at low level, slow recovery
* Integration of Ciba faster than initially planned
* Stock hits 14-mth high, outperforms sector index
(Adds spokesman's comment, background on signs of upswing)
By Ludwig Burger
FRANKFURT, Oct 14 (Reuters) - The world's largest chemicals maker, BASF, came to market early with forecast-beating quarterly results on Wednesday, boosted by cost cuts and higher sales, lifting its stock to a 14-month high and boosting sentiment across the sector.
Some two weeks ahead of schedule, Germany's BASF said third-quarter earnings before interest and taxes (EBIT) excluding one-off items rose 9.5 percent to 1.25 billion euros ($1.86 billion) from the second quarter, although this was still down 20 percent year-on-year.
Analysts had forecast 1.04 billion euros, a 9 percent decline from the second quarter, according to Thomson Reuters I/B/E/S. An analyst survey on BASF's website showed an average forecast of 914 million euros for adjusted EBIT.
A company spokesman said BASF had decided to bring forward the release of key figures after it became evident that third-quarter results would clearly beat market expectations.
Shares in BASF, whose offering includes oil and gas, car coatings, catalytic converters, construction chemicals and pesticides, rose as much as 7.4 percent, hitting a 14-month high at 40.61 euros, and were up 6.9 percent at 1324 GMT.
The DJ Stoxx chemicals index was up 3.8 percent, extending gains after BASF's release.
"The preliminary figures look very good. They come as a surprise to the market," said Harald Gruber, an analyst with Silvia Quandt Research in Frankfurt.
"It seems that BASF has benefited from better sales volumes at its chemicals units. The cost-cutting programmes also seemed to have taken effect," LBBW analyst Ulle Woerner said.
Chief Executive Juergen Hambrecht, who had repeatedly warned that signs of a resurging demand were being over interpreted, cautioned again that the recovery was "slow and fragile."
Still, BASF'S results add to evidence of an incipient upswing. Domestic rival Bayer, which competes with BASF in the market for padding and insulation foam chemicals, said last week orders at its MaterialScience unit were improving.
Germany's chambers of industry and commerce said on Wednesday that stronger foreign demand should fuel a German economic recovery next year, with business expectations now at their highest level since mid-2008.
"The numbers are in line with voices in the chemical industry that we have been hearing lately that have spoken of a revival in demand," Silvia Quandt Research's Gruber said.
BASF's sales in the three months through September, traditionally its weakest quarter, rose 2.4 percent from the second quarter to 12.8 billion euros, also better than forecasts and a year-on-year decline of 19 percent.
Growth was coming from Asia, especially China, as well as South America, it said.
In addition, BASF said the integration of Ciba, the Swiss rival it bought for 3.4 billion Swiss francs ($3.34 billion), was proceeding faster than expected and higher special charges would be included in third-quarter results.
More detailed results would be published on Oct. 29, the date originally scheduled for its third-quarter report. (Additional reporting by Frank Siebelt; Editing by Dan Lalor and Simon Jessop) ($1 = 0.6717 euro = 1.019 Swiss francs)