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HELSINKI Sep 8 (Reuters) - Finnish construction firm YIT (YTY1V.HE) warned on Monday its 2008 pretax profit would fall year-on-year, citing further weakening in demand in Finland and the Baltic countries and increased economic uncertainties.
Shares in the company fell 8.2 percent to 9.30 euros, to their lowest levels since February 2005, compared with a 5.4 percent stronger DJ Stoxx European construction index .SXOP.
"They have seen by now how the sales have developed in August. That must have been disappointing," Kaupthing analyst Ronny Viljanen said.
The company previously estimated that 2008 sales and profit before taxes would grow year-on-year.
Finland's residential building market is expected to stage sharp back-to-back drops, contracting 7 percent in 2008 and 5 percent in 2009.
YIT's construction activities in Finland made up 31 percent of the company's sales in the first six months of 2008 and analysts said the group's booming services unit would not be enough to compensate for the weak domestic and international construction markets.
After double-digit percentage growth and fears of economic overheating, Estonia, Latvia and Lithuania this year face a new challenge of coping with a slowdown and avoiding a hard landing.
Both the souring construction climate in the Baltic countries and the uncertain outlook for the Nordics have already triggered a profit warning from equipment rental company Ramirent (RMR1V.HE) and hurt its peer Cramo (CRA1V.HE).
YIT has lost more then half of its value in the last 14 weeks, wiping out gains made over the last few years on hopes for its booming Russian operations.
YIT's profit warning hit smaller peer Lemminkainen (LEM1S.HE), whose shares fell 5 percent.
"I don't think this is a YIT specific issue. Estimates for the other companies would need to come down as well," eQ Bank analyst Tomi Tiilola said.
(Reporting by Agnieszka Flak; Editing by Andrew Callus and Sue Thomas)