Nokia eases investors' fears

Nokia, the world's largest producer of mobile phones, is seeking to calm investors by saying its earnings in the first quarter of the financial year will be in line with expectations.

Some analysts believe this means the downturn in the mobile phone sector could be nearing an end.

Nokia admits that its sales growth will be slower than expected, and the total global market for mobile phones this year will fall short of its earlier estimates.

Dealers say investors have been bracing themselves for a more significant profit warning from Nokia following days of rumours.

One Paris dealer says: "The Nokia statement has had a calming effect on the market.

"We expected some kind of warning in line with other recent earnings changes, but it was better than expected. It may even be an indication that we're approaching the bottom of the downswing."

In Helsinki, the company's shares leapt by around 13% to 27.70 euros on the news, before falling back slightly to 26.55 euros still up about 8%.

Analysts say the announcement shows the company is weathering the poor conditions in the market much better than its competitors. Rivals Motorola and Ericsson have both recently issued profit warnings.

Jorma Ollila, Nokia chief executive, says: "We expect to see solid growth for the first quarter as a whole, with better than anticipated margins."

In a statement, the company adds: "During the last few months, in a period of difficult market conditions, Nokia has been able to strengthen its leadership position in mobile communications."