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HELSINKI (AFP) - Europe's leading paper maker Stora Enso reported an unexpectedly strong switch into profit on Tuesday and revealed that it had taken control of a Chinese packaging company.

Stora Enso reported third-quarter net profit of 193.2 million euros thanks to increases in both demand and product prices, a big turnaround from a net loss of 519.7 million euros at the same time last year.

And it said it was buying 51.0 percent stake of Chinese firm Inpac International.

The net profit exceeded the figure forecast by analysts as polled by Dow Jones Newswires. They had foreseen a profit of 135.7 million euros

"A very significant part of our earnings improvement again came through early cost reductions and active management of both pricing and customer mix," Stora Enso CEO Jouko Karvinen said in a statement.

Company data showed demand rising across every product category except one, when compared to the third quarter of 2009, with prices for most product offerings higher as well.

The price of shares in the company rose by 2.5 percent shortly after the opening of the Helsinki stock exchange, at 7.63 euros, while the market was slightly up 0.2 percent.

Stora Enso said the market outlook was generally favourable but said that pressure on variable costs, seasonal drops in demand, and production halts for maintenance are expected to decrease fourth quarter earnings quarter-on-quarter.

The company announced its purchase of a 51.0-percent share in Inpac International, which is a leading packaging supplier to the mobile phone industry in the Asia-Pacific region, with 2009 sales figures of 82 million euros.

"We believe that this acquisition provides an excellent opportunity to enhance our presence in China and India," Mats Nordlander, Stora Enso's executive vice president in Asia said in a statement.

Stora Enso's third-quarter sales topped 2.62 billion euros, which was nearly a 400 million-euro improvement over the same period last year, but were down by 69 million euros from the second quarter of 2010.

"Prices for the group's products were generally higher except in newsprint and magazine paper, where prices were lower than a year ago," the company said in its quarterly report.