UPDATE 3-Demand from farmers boosts Germany's Bayer

(Adds analyst comment, share price, details)

By Mantik Kusjanto

FRANKFURT, July 30 (Reuters) - Bayer's BAYG.DE quarterly core profit rose 5 percent as strong sales of its weed and fungus killers and cancer drugs more than offset weaker plastics income hit by rising raw material and energy costs.

Thanks to robust demand for agrochemical products, Bayer doubled its sales growth expectations for the business, leading to a slight sales upgrade for the group, whose market capitalisation is $68 billion.

"The successful first half of 2008 has strengthened our confidence for the full year," Bayer Chief Executive Werner Wenning said on Wednesday.

But Bayer shares fell 1.4 percent to 54.93 euros at 1245 GMT, compared with a 1.3 percent rise in the German blue-chip DAX .GDAXI index as growth at the company's drugs business slowed.

"The healthcare business was slightly weaker than expected," said Tero Weckroth, an analyst at Dresdner Kleinwort.

Jochen Schlachter, a credit analyst at Unicredit, said he kept his overweight recommendation for Bayer's senior bonds after the results as he expected continued positive operating performance and a steadily improving credit profile.

"With economic conditions becoming more challenging, we like Bayer's exposure to pharmaceuticals and agrochemicals, which should add stability to its earnings and cash flow generation," Schlachter added.