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Nippon Steel Raises 07/08 Net Profit Estimate

Nippon Steel raised its full-year net profit forecast by 4% to 365 billion yen ($3.16 billion) on Thursday and said it would pay a higher first-half dividend after Japanese carmakers agreed to pay more for its sheet steel.

Strong demand for Japanese cars and stable steel prices in Asia are boosting profit at Nippon Steel and its smaller rival JFE Holdings, though some analysts see a slowdown in earnings momentum for another Asian giant, South Korea's POSCO.

Nippon Steel, the world's second-biggest steel maker and the biggest beneficiary of strong worldwide sales of Japanese cars, had said in April it expected 350 billion yen in group net profit for the business year ending in March 2008.

In revised forecasts issued on Thursday it left its expected full-year pretax recurring profit unchanged at 600 billion yen (US$5.2 billion). That is well below a market consensus estimate of 639.12 billion yen in a survey of 13 analysts by Reuters Estimates.

Nippon Steel said it would pay a dividend of 5 yen for the April-September first half, up from 4 yen in the same period last year.

Japanese steelmakers and their biggest client, Toyota Motor, earlier this year agreed to price rises of more than 10% for speciality steel and 5% for steel sheet used in car bodies, media reports said.

These started filtering into profits in the July-September second quarter.

In July, JFE Holdings raised its full-year recurring profit estimate by 4% to 540 billion yen. It also raised its half-year dividend forecast to 60 yen from 50 yen.

Shares in Nippon Steel shed 1.9% between April and August, underperforming a 0.3% dip in the iron and steel sub-sector index. JFE rose 8.5%.