Mining slump weighs on Nordic suppliers Sandvik, Metso

* Sweden's Sandvik says Q3 mining orders down 17 percent

* EBIT 2.5 billion crowns vs forecast 2.7 billion

* Finland's Metso says mining, construction orders down 19 percent

* Steps up programme of costs cuts

By Niklas Pollard and Johannes Hellstrom

STOCKHOLM, Oct 24 (Reuters) - Swedish machinery and tool maker Sandvik said on Thursday a sharp fall in demand from a shrinking mining industry was showing signs of levelling out.

But the slump still hit its earnings, and led to a fall in orders at Finnish rival Metso, which also stepped up a programme of cost cuts.

The global mining industry is under pressure to reduce overheads as demand for raw materials levels off after a decade of strong growth, and sector heavyweights led by BHP Billiton and Rio Tinto have slashed capital spending by billions of dollars.

The cuts have translated into job losses and plunging order intakes for a cluster of Nordic suppliers.

Sandvik, which together with Swedish peer Atlas Copco supplies more than half the world's underground mining gear, said the order intake in its mining business fell 17 percent year-on-year in the third quarter.

The rate of decline eased from the second quarter, however.

"The mining market has stabilised at a low level and now we are at least booking orders at the same rate as we are invoicing," Sandvik Chief Executive Olof Faxander told a conference call with reporters.

But while demand from the mining industry showed signs bottoming out, project delays and order deferrals continued to affect large parts of Sandvik's mining business, which accounts for roughly a third of group sales, the company said.

Sandvik, which unveiled a new round of cost cuts last month, said order cancellations were negligible but that lead times in its equipment order pipeline were running as short as three months compared to roughly 9-12 months ahead of the slowdown, a sure sign of a dwindling backlog.

A top supplier of drill rigs and loaders, Sandvik said operating earnings fell to 2.53 billion crowns ($397 million) from a year-ago 3.33 billion, short of a mean forecast of 2.68 billion in a Reuters poll of analysts.

Metso, which ranks as a second-line mining supplier along with Denmark's FLSmidth and Finland's Outotec , said separately on Thursday that third quarter mining and construction orders fell 19 percent.

That pushed group bookings down by a similar amount to 1.25 billion euros - well below analysts' forecasts for 1.48 billion.

Metso, also contending with weakness in its pulp, paper and power business, said it would increase planned costs cuts to 100 million euros ($138 million) by the end of 2015 in the face of what it called a "volatile" market environment.

That would involve closing small domestic operations and job losses at its metal recycling plant in Duesseldorf, Germany.


GLOBAL SLOWDOWN

The global reach of the mining slowdown was in full view earlier this week when Wall Street-listed Caterpillar Inc , the world's biggest maker of mining and construction gear, yet again cut its full-year revenue outlook and forecast a further decline in mining-related sales in 2014.

Most metals and raw materials prices have come off this year, though Sandvik noted resilience in copper, supported largely by demand from China, which accounts for roughly 40 percent of global refined copper.

"Copper is the area we consider strongest at the moment while gold, silver, iron ore and coal all are pretty weak markets," CEO Faxander said. "Above all coal in the western world is the single toughest segment."

Copper projects put up for sale by retrenching majors, for example, have been among the first to fly off the shelves as strategic buyers in China in particular fear a future supply crunch, as major historic mines begin to age.

Sandvik also makes a wide range of metal-cutting tools and speciality steels, but the mining slump loomed large over group order intake which fell to 20.2 billion crowns from 21.8 billion a year ago, just below the 20.3 billion seen by analysts.

Metso, which like Outotec issued a profit warning last week, was set to issue its full earnings report later on Thursday while Atlas Copco reports on Friday and FLSmidth on Nov. 6.