President and chief executive Jussi Pesonen said that with market forecasts and demand improving, UPM would look to increase prices for its magazine and graphic fine paper grades by between 5-8% in Europe with effect from September.

He revealed the increase as UPM presented its results for the first half of the year.

Sales increased slightly to 3.2bn (euro4.9bn) for the first six months of 2004. Pre-tax profits were 96.4m, a fall of 26% on the same period last year due to lower paper prices and the strength of the euro.

Fellow Finnish firm M-real reported an operating loss of 13.1m in its first-half figures for 2004, a significant reversal from a 54.2m profit for the same period last year.

Turnover fell 12.5% to 1.7bn. The Finnish papermaker's results for the first six months of 2004 suffered due to the costs for annual maintenance shutdowns, weak prices and low delivery volumes.

Coated magazine paper prices had decreased, while much needed price increases for coated fine papers in Europe failed to go through. However, demand for paper in the first half of this year improved.