* New CEO currently leads largest unit by sales, profit
* Starts March 1, 2011
* Current CEO, 2 other top managers to retire in 2011
* Shares rise 3.8 percent
(Recasts, adds quotes, details, share price)
HELSINKI, Aug 26 (Reuters) - Engineering group Metso has tapped a key insider as next chief executive as the firm starts to renew its core leadership.
Metso said Matti Kahkonen, the head of its mining and construction unit, would replace current CEO Jorma Eloranta on March 1, 2011, when Eloranta retires.
Metso flagged the retirement in March, with its chief financial officer and paper unit head also set to step down in 2011.
Its shares rose on the appointment, up 3.8 percent at 28.68 euros at 0809 GMT, outpacing a firmer STXE 600 Industrial Goods and Services Index.
"The positive thing is that the apppointment brings some continuity given that three senior guys will be leaving the company," one Helsinki-based analyst said.
Finland's Metso, whose focus is on the mining, construction, energy and paper sectors, has been one of Helsinki's stronger performers in 2010, with its shares up 15 percent to date thanks to improving earnings and a growing order book.
The firm has announced two large pulp and cartonboard deals in China this week alone, valuing the contracts at 170-240 million euros ($216-305 million) in total. It said in July demand was recovering, especially in emerging markets.
Board Chairman Jukka Viinanen told a news conference the search for Eloranta's replacement took around half a year, and after reviewing candiates "the best man came from the inside."
Kahkonen, 54, whose unit is Metso's largest by sales and profits, said one of his main priorities was to fill the key management roles that will come open.
"We have to get a leadership team together, hopefully this autumn or the latest at the start of next year," he told the news conference. "In the longer term we have a good (strategy) starting point to work from." (Reporting by Brett Young; Editing by David Cowell)