UPDATE 1-Weak China market hits Finnish elevator maker Kone

(Adds outlook, regions, background)

HELSINKI, July 19 (Reuters) - Finnish elevator maker Kone missed second-quarter profit forecasts on Wednesday, hit by falling demand and sliding prices in China, the world's biggest elevator market.

However, Kone said the rate of decline in Chinese demand was now easing, and modest growth in North America and Europe, as well as in service business, helped total sales and new orders in the quarter to increase slightly from a year earlier.

"Higher raw material prices, price pressure witnessed in our Chinese new equipment business and increased R&D and IT spend burdened our operating income," Chief Executive Officer Henrik Ehrnrooth said in a statement.

Operating profit in the quarter fell 6 percent from a year earlier to 326 million euros ($376 million), missing analysts' average forecast of 333 million euros.

Sales at comparable exchange rates were up 1.7 percent at 2.28 billion euros, roughly in line with expectations.

Shares in the company were down 4 percent to 43.67 euros at 1030 GMT.

The Chinese market, where Kone is the market leader, has fallen for two years and Kone repeated it expects it to decline again by 0-5 percent in its full financial year in unit terms.

For the full year, Kone expects its total sales to grow by 1-3 percent and operating profit to be in a range of 1.20-1.28 billion euros, compared with 1.29 billion in 2016.

Kone's strong market position in China had helped it increase profits for years, but in April the company reported its first year-on-year decline in quarterly profits in 48 quarters.

Kone is the world's second-largest elevator maker after Otis, owned by U.S. group United Technologies. It also competes with Switzerland's Schindler and Germany's ThyssenKrupp. ($1 = 0.8672 euros) (Reporting by Jussi Rosendahl; Editing by Jacob Gronholt-Pedersen and Mark Potter)