* Says Demag takeover increasingly unlikely
* Q3 EBIT before one-offs 34.3 mln euros vs 26.2 mln in poll
* Sales 394 million euros vs 381 million in Reuters poll
* Repeats sees 2010 sales, EBIT before one-offs, down yr/yr
* Shares up 8.2 percent at more than two-year high
(Releads, adds CEO, analyst quote, updates shares)
By Terhi Kinnunen
HELSINKI, Oct 21 (Reuters) - Finnish cranemaker Konecranes said the likelihood for taking over German rival Demag had decreased, while it reported third-quarter profit above expectations, sending its shares 8 percent higher.
Konecranes approached Demag last month, but the German firm rejected any talks. Shares in Demag have surged on takeover speculation and dropped 4 percent on Thursday, hurt by Konecranes comments.
"The fact that we have not succeeded in entering into discussions with Demag and the steep increase in Demag's share price since our approach have reduced the likelihood of a potential combination," Chief Executive Pekka Lundmark said.
A merger of Konecranes and Demag, leading makers of cranes used to load and unload goods in ports, would create a cranes maker with about 15,000 workers and annual sales of 2.6 billion euros ($3.62 billion).
Konecranes shares were 8.2 percent higher at 30.33 euros by 0830 GMT, outpacing almost flat STOXX Europe 600 Industrial Goods and Services index.
"There is relief ... some feared that Konecranes was going to take the debt acquisition road and this does not seem likely," said Pekka Spolander, analyst at Pohjola bank.
STRONG QUARTER
"We have been able to defend our sales margins in this fragmented industry where there is still a lot of overcapacity. Where price erosion has occurred we have mitigated it by lower costs," Lundmark said.
July-to-September operating profit adjusted for one-offs rose to 34.3 million euros ($48 million), beating an average forecast for 26.2 million in a Reuters poll in which estimates were in a 23.0-28.9 million range.
Sales grew 7 percent to 394 million euros, beating all forecasts in the poll. Order intake was 373 million euros, in line with the consensus.
Konecranes repeated its guidance for 2010, saying it expected full-year sales and operating profit, excluding restructuring costs, to fall year-on-year.
Lundmark said while the market was slowly improving after the global financial recession "the current situation still calls for cautiousness". (Reporting by Terhi Kinnunen; Writing by Tarmo Virki; Editing by Dan Lalor and Michael Shields) ($1 = 0.7181 euro)