* Change mainly affects foreign projects
* Q3 net 11.45 bln crowns vs f'cast 10.03 bln
* Shares rise 2.4 percent, outperform wider Czech market
(Adds price forecasts, update shares)
By Jan Korselt and Jason Hovet
PRAGUE, Nov 9 (Reuters) - Czech power group CEZ cut its investment by 78 billion crowns ($4.4 billion) for 2010 through 2014, pulling out of projects abroad to focus on the domestic market and respond to weaker power prices.
Central Europe's largest listed company also posted a smaller-than-expected dip in third-quarter earnings, beating even the most optimistic forecast in a Reuters poll.
The company said it expected power prices to creep up in the years ahead but not to reach the pre-crisis levels that had fed ambitious investment plans and record profits in recent years.
CEZ, the no. 8 European power company with a market capitalisation of $23.5 billion, had said this summer it would slow its foreign expansion and concentrate on its home market.
The reduction announced on Tuesday, cutting the 2010-2014 investment plan by 21 percent to 297 billion crowns, was the first time the majority state-owned power group had put a price on the change in strategy as a result of the economic crisis.
The European energy sector has been retrenching, with Germany's E.ON rethinking strategy and RWE saying it would have to update in February its earnings outlook for 2013.
Analyst Petr Bartek of Ceska Sporitelna said both the investment plans and the results were positive for the stock, which has lost 9.8 percent so far this year, compared with a 4.4 percent gain in the Prague PX index.
"This (investment sum) is lower than I expected and for me it is positive they were able to lower investment spending by such an amount," Bartek said.
CEZ shares, hurt by lower power prices and a tax on carbon credits planned by the government, rose 2.4 percent to 783 crowns by 1127 GMT, in a Czech market which was up 0.7 percent.
CEZ said it was moving ahead with its flagship project, the planned expansion of the Temelin nuclear power plant which is the biggest ever Czech procurement deal. It plans to pick the supplier in 2013, after delays announced previously.
PRICE OUTLOOK
CEZ sales director Alan Svoboda said the company had been selling 2011 and 2012 power for 51 to 52 euros. While the company had sold out 94 percent of the 2011 baseload capacity, it is not in a hurry to sell 2012.
"In 2012 we expect that the trends will turn around a little, that the gas price, which affects electricity prices, will recover, and possibly the price of carbon permits will grow and the electricity market will allow higher spreads," he said.
He said he saw prices climbing to 55-60 or possibly 65 euros in the coming years, below the 70 euro level seen in 2008-2009.
CEZ's net profit for the third quarter of 2010 fell to 11.45 billion crowns from last year's restated 11.94 billion. That compares with an average forecast of 10.03 billion, according to Reuters poll of 16 analysts.
KBC Securities said the higher-than-expected results were due to a rise in output, expansion in the heating market, a lower-than-expected drop in prices and a one-off foreign exchange gain.
CEZ, 69.8 percent owned by the state, said revenue rose to 45.71 billion crowns from last year's 43.76 billion.
It confirmed its outlook for full-year net profit before minorities of 46.7 billion crowns and earnings before interest, tax, depreciation and amortisation (EBITDA) of 88.7 billion.
CEZ cut its full-year production outlook to 62.8 terrawatt hours from 64.5 TWh. (Additional reporting by Jana Mlcochova; Writing by Jan Lopatka; Editing by Hans Peters and David Holmes) ($1=17.67 Czech Crown)