(Updates after four states, adds economist comment)
By Dave Graham
BERLIN, Oct 29 (Reuters) - Falling oil and food prices probably helped to cool German inflation for the third month in a row in October, giving the European Central Bank added scope to cut interest rates and bolster the broader euro zone economy.
The annual inflation rate in four German states slowed by between 0.3 and 1.3 percentage points compared with September, figures released on Tuesday and Wednesday showed.
Data for six German states are used to calculate a preliminary inflation figure for Germany, and also give the first insight into price trends across the euro zone.
"In our view, the ECB can cut rates again against this backdrop," said Matthias Huth, an economist at LBBW.
Inflation in the states that have published data so far now lies between 2.0 percent in Hesse and 2.7 percent in Saxony.
The ECB has raised the prospect of a rate cut next week, but at 3.6 percent in September, inflation in the euro area remains well above the bank's target level of just under 2 percent.
The consensus forecast of a Reuters poll of economists was that euro zone inflation would slow to 3.2 percent this month. A flash inflation estimate is due to be published on Friday.
Unicredit economist Alexander Koch said falling oil prices meant the German outlook for disposable income was brightening, possibly sowing the seeds for a recovery in domestic demand.
"A sustained oil price decline to $50 per barrel would bring down average inflation even below 1 percent next year," he said.
Month-on-month, prices fell in the states by between 0.1 percent and 0.7 percent, chiefly led by cheaper fuel and seasonal foods, figures showed on Tuesday and Wednesday.
In Hesse, the annual inflation rate slowed 1.3 percentage points, largely due to the abolition of study fees by the state's parliament one year after they were introduced.
Germany's national gauge of consumer prices (CPI) -- due to
be published later on Wednesday -- was seen dipping by 0.2
percent on the month. The annual inflation rate was expected to
slow to 2.4 percent from 2.9 percent in September
The EU-harmonised price index (HICP) was seen falling by 0.2 percent on the month. Prices were tipped to rise 2.6 percent on the year -- down from 3.0 percent in the previous month.
The ECB has said it expects inflation in the euro zone to ease as the year progresses, but continues to stress the need to keep price pressures across the bloc in check.
Amid growing concern about the economic outlook and turmoil on financial markets, ECB President Jean-Claude Trichet has said the bank could cut interest rates again when it meets on Nov. 6.
The ECB cut its benchmark to 3.75 percent on Oct. 8 in a coordinated move with other major central banks.
Recession fears were stirred again on Monday when a closely watched business survey showed corporate expectations in Germany, Europe's biggest economy, slumping to their lowest level since the country reunified in 1990.
(Editing by Victoria Main)