UPM president and chief executive Jussi Pesonen said that increases announced in Europe and North America would come into effect gradually.

He confirmed that the Finnish paper-maker aimed to substantially raise next year's contract prices for paper in Europe. "Demand continues to be strong and advertising is on the increase," said Pesonen.

Stora Enso chief executive Jukka Hrml agreed. "Demand for publication papers continues to grow and price increases are expected at the beginning of next year," said Hrml.

He added that some price rises were being implemented in the last quarter of this year in both coated and uncoated fine paper.

UPM reported an improvement in its quarterly figures for the first time in three years. The results to 30 September showed an improvement in sales, while pre-tax profits had more than doubled. Sales for the third quarter increased 2% to 1.7bn (Euro2.45bn) while pre-tax profits increased by 183% to 169m.

Pesonen said that the outlook remained positive and that the firm was operating more cost-effectively. Rival Stora Enso reported a slight increase in sales and a rise of 9% in pre-tax profit to 80m. Sales for the group rose by 1.5% to 2.1bn.

Story by Andy Scott