"Trading for the peak summer season is encouraging and together with positive forex effects, we are confident for the fourth-quarter performance," Chief Financial Officer Horst Baier told analysts on Tuesday.

TUI AG (TUIGn.DE) said that TUI Travel (TT.L) , the world's biggest tour operator in which TUI holds a 56 percent stake, may even exceed current expectations should the British pound remain strong against the euro.

Last week TUI Travel said summer holiday bookings had risen as a wet start to the summer tempted northern Europeans to book package holidays.

Shares in TUI were up 5.8 percent at 5.72 euros at 0938 GMT, the top gainer on the index for German medium-sized companies .MDAXI.

The group, which plans to sell its stake in container shipping company Hapag-Lloyd in order to fully focus on tourism, did not say anything about its plans for TUI Travel.

A source close to TUI AG told Reuters on Monday that the group was considering buying TUI Travel's Central European business as a first step toward a full takeover of the London-listed company.

Baier declined to comment on the subject, saying only that TUI AG, which will get a new CEO next year, has different alternatives and had not yet entered a formal decision-making process.

Silvia Quandt analyst Stefan Kick said buying the TUI Travel regional business - which comprises Germany, Austria, Switzerland and Poland - would be the best move as TUI Travel would get funds to invest in emerging markets and TUI AG would get tax benefits from the deal.

TUI AG reported third-quarter sales of 4.73 billion euros, producing underlying earnings before interest, tax and amortisation (EBITA) of 102.3 million euros and coming in better than average analyst expectations for flat earnings of 96.3 million euros.

Hapag-Lloyd, in which TUI AG still holds a 22 percent stake, also on Tuesday said it swung to an operating profit of 30.8 million euros in the second quarter after it pushed up its shipping price rates.

TUI has two options for selling its remaining Hapag-Lloyd stake, either a share flotation or a direct sale of the stake to a third party.

Baier said both capital markets and the container shipping market had to be right for an initial public share offer.

"We see some signs that things are turning to the better as far as the shipping industry is concerned," he said, adding that capital markets wouldn't stay closed forever. (Editing by Greg Mahlich)

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