* Mercedes Q3 EBIT from continuing business up 29 pct
* Daimler sticks with 2014 EBIT forecast for divisions
* To review 2014 outlook for industrial free cash flow
* Shares jump, trade 3.2 percent higher at top of DAX (Adds Mercedes-Benz Cars EBIT figure, trader comment)
FRANKFURT, Oct 14 (Reuters) - German car and truck maker Daimler reported a 29-percent jump in quarterly core earnings at Mercedes-Benz Cars, its biggest business, surprising investors wary of an economic slowdown and pushing its shares higher.
Mercedes posted its best-ever quarterly sales in the third quarter through September thanks to the release of new models and surging demand in China, Daimler said on Tuesday.
Carmakers selling vehicles in the United States are also benefiting from the euro's weakening against the dollar.
Earnings before interest and tax (EBIT) from ongoing business at Mercedes-Benz Cars rose to 1.61 billion euros ($2.04 billion) in the third quarter from 1.25 billion in the year-earlier period.
Daimler said it was sticking with its 2014 forecasts for its divisions, which also include Daimler Trucks, where quarterly core earnings rose 17 percent to 618 million euros.
"Finally some good news," a local trader said, adding Daimler's statement raised hopes for an increase in forecasts.
Shares in Daimler, which is due to publish full quarter financial results on Oct. 23, jumped on the news and were up 3.2 percent to 58.51 euros, at the top of Germany's blue-chip DAX index, by 0835 GMT.
Daimler also said it would review its guidance for 2014 industrial free cash flow, a major factor when it comes to funding dividends, after the figure jumped in the third quarter.
The group has so far said it expects full-year industrial free cash flow, adjusted for acquisitions and disposals, to decline significantly from the 3.2 billion euros posted in 2013.
In the third quarter adjusted industrial free cash flow rose to about 2.9 billion euros from 1.6 billion in the year-earlier period.
($1 = 0.7877 euro) (Reporting by Maria Sheahan; Additional reporting by Hakan Ersen; Editing by Christoph Steitz and Mark Potter)