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UPDATE 1-Scania says 2004 west Europe truck sales may rise

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STOCKHOLM, Oct 27 (Reuters) - Scania , Europe's third-biggest truck maker, posted third-quarter pre-tax profit just below market consensus on Monday but said western European sales could show a slight improvement next year.

"Economic growth in Scania's main markets in western Europe was weak but is expected to improve somewhat next year," Chief Executive Leif Ostling said in a statement. "Earnings for the rest of 2003 are expected to remain at a satisfactory level."

Scania posted pre-tax profit of 765 million crown ($99.37 million), compared with a consensus estimate of 771 million in a Reuters poll of 14 analysts and 532 million crowns a year earlier.

Sales were 11.6 billion crowns compared with an expected 10.47 billion and 10.38 billion a year ago.

Scania said orders for heavy trucks declined by two percent.

"Increased demand from markets outside western Europe could not offset the downturn in the western European market, Ostling said.

Analysts have said that demand this year in the Swedish truck maker's core segment, trucks at the top end in terms of power and performance, has remained fairly stable, despite an overall downturn in the truck market in Western Europe.

Western and eastern Europe together account for around 80 percent of Scania's sales.

The truck industry, which tends to reflect wider economic conditions, has suffered in the last two years from slumping demand on both sides of the Atlantic, with most players hit.

But last week the world's number-two truckmaker, AB Volvo , beat expectations with its third quarter profits and raised its forecast for total demand for heavy trucks in Europe.

Additionally, the truck unit of Germany's MAN said it expected significantly stronger profits this year and next and forecast a slight pick-up in European truck demand in 2004.

Scania shares were up about half a percent in a stronger Swedish market whose benchmark OMX index was up just over one percent.