* Q3 GDP shows second quarterly growth after recession
* Bond yields edge lower as data backs H2 '10 rate hike view
* Agency sees GDP down 3.0 pct in 2009, up 3-4 pct in 2010
* Agency sees GDP annual growth of 2.7-3.2 pct in Q4
* Exports, govt stimulus key growth drivers (Adds details, graphic, quotes from analysts, PM, company)
By Orathai Sriring and Vithoon Amorn
BANGKOK, Nov 23 (Reuters) - Thailand's economic growth unexpectedly slowed in the third quarter from the previous three months, triggering bond yields to tick down as the data reinforced views rates will remain on hold well into 2010.
A pick-up in growth is expected from the final quarter as government stimulus spending speeds up and exports rebound, but the recovery is likely to be gradual and the central bank will stay put until the second half of next year, analysts said.
"The central bank should still keep the interest rate where it is until the second half of 2010, with political factors being one of the major risks to the country's economic growth," said Pimonwan Mahujchariyawong, an economist at the Kasikorn Research Center in Bangkok.
The economy grew 1.3 percent in the September quarter after a revised 2.2 percent in the June quarter, when it emerged from its first recession in 11 years, as moderated manufacturing output was offset by a pick-up in exports and household spending.
The expansion in the $260 billion economy was weaker than the 2.3 percent economists had expected, but the contraction from a year earlier of 2.8 percent was better than the 3.3 percent forecast.
Government bond yields slipped across the board following the data, with that on the benchamrk 5-year debt slipping 5 basis points to 3.45 percent, traders said.
Bond yields have been falling after the central bank chief told Reuters early this month interest rates could stay at a record low of 1.25 percent beyond mid 2010 if the economy did not improve.
The central bank has left rates unchanged at its past four policy meetings and is expected to hold them again on Dec. 2. It cut rates by a combined 250 basis points from December to April.
POLITICAL UNCERTAINTY
Many forecasters factor political instability into their outlook for Thailand, with no end in sight to a seemingly intractable political crisis, underscored by plans for longed anti-government protests starting on Nov. 28.
"The economy has shown clear signs of recovery after two straight quarters of growth. The key factor now is the continuity of government policies," Ampon Kittiampon, head of the National Economic and Social Development Board (NESDB), told a news conference.
The government plans to spend 1.43 trillion baht ($43 billion) over three years from September to help the economy, after its $3.5 billion stimulus in the first half.
The NESDB expected the economy to return to positive annual growth of 2.7-3.2 percent in the final quarter. Capital Nomura has forecast 2.9 percent but says that will probably be revised up.
"The economy in the fourth quarter should be positive, boosted by improved exports, tourism, consumption and government spending," the agency said in a statement.
But analysts at Goldman Sachs said private investment was likely to remain subdued until the second half of 2010, when a recovery in external demand is expected to take a firmer footing.
While capacity utilisation rate has rebounded to around 60 percent, it remains below the pre-global crisis average of 68 percent, suggesting any pick up in business investment will be low, it said in a note to clients.
The agency expects the economy to grow 3.0-4.0 percent in 2010, which is in line with the 3.5 percent predicted by economists polled by Reuters, but more pessimistic than 3.3-5.3 percent projected by the Bank of Thailand.
Prime Minister Abhisit Vejjajiva said he expected Southeast Asia's second-biggest economy to grow 3.0-3.5 percent in 2010.
Other regional economies are recovering. Malaysia's contracted 1.2 percent in the third quarter from a year earlier, improving from a 3.9 percent decline in the second, and Indonesia's annual growth rate picked up in the third quarter.
Manufacturing grew 2.6 percent in the quarter from the previous quarter and firms say orders are picking up.
"We plan to run round the clock in the fourth quarter, which will boost our utilisation rate from about 50-60 percent in the third quarter," Thitipong Tangpoonphoonvivat, executive director at Mill Con Steel Industries, said last week.
Exports of goods and services rose 5.2 percent from the previous quarter, while imports gained 2.0 percent and household spending edged up 1.0 percent, the data showed.
The baht was little changed after the data, trading around 33.19 per dollar at 0917 GMT while stocks were down 0.37 percent.
Thailand slipped into recession in the first quarter when its GDP contracted a revised 1.5 percent after a collapse in exports, following a 4.8 percent fall in the fourth quarter of 2008. The recession was its first since the 1998 Asian economic crisis. (Additional reporting by Kitiphong Thaichareon; Writing by Orathai Sriring ; Editing by Alan Raybould & Kazunori Takada) ($1=33.20 Baht) ((vithoon.amorn.reuters.com; Reuters Messaging: vithoon.amorn.reuters.com@reuters.net; 662-6489737)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))