HELSINKI (AFP) - Europe's top paper maker Stora Enso reported improved fourth quarter earnings Thursday thanks to cost cuts but said demand would improve slowly and paper prices remain under pressure this year.

"After three consecutive years of very significant if different challenges, we could have hoped for an easier 2010," chief executive Jouko Karvinen said in a statement.

The Finnish group reported a fourth quarter net profit excluding one-off items of 76 million euros (105 million dollars), reversing a loss of 67.2 million euros a year earlier, boosted by lower fibre and recycled paper costs as well as cheaper energy and chemicals.

Sales in the three months to December fell around eight percent to 2.4 billion euros, weighed down by production cuts, lower deliveries and weaker paper selling prices.

"Global economic recovery is underway but any pickup in demand for the Group's products is forecast to be slow and insufficient to restore supply and demand balance in the short term and alleviate overcapacity," it said.

The paper industry as a whole has suffered from overcapacity and weak paper prices for years.

Stora Enso's forecasts echoed those given by Norway's loss-making Norske Skog on Thursday and rival Finnish paper maker UPM-Kymmene earlier in the week.

In October-December, Stora Enso said it curtailed paper and board production by 15 percent, cut pulp production by 19 percent and trimmed sawn-wood production capacity by 15 percent.

Further capacity cuts may come this year, it said.

Separately, Stora Enso said its Montes del Plata joint venture with Arauco was considering opening a new pulp mill in Uruguay.

Stora Enso's full year 2009 sales fell 19 percent to 8.9 billion euros while its net profit excluding non-recurring items improved to 153.2 million euros from 142.8 million euros in 2008.

At 1050 GMT, shares in Stora Enso were flat at 4.50 euros on a slightly negative Helsinki Stock Exchange.