UPDATE 2-SKF CEO still expects modest demand decline in Q2

* Retains forecast for slight quarter-on-quarter fall

* Also still expects Q2 sales decline similar to Q1

* Tunnel but no light yet, says CEO

(Adds CEO quotes)

NIEUWEGEIN, Netherlands, May 19 (Reuters) - Sweden's SKF (SKFb.ST), the world's biggest bearings maker, still expects demand for its products to decline modestly in the current quarter as the global downturn continues to weigh.

"We expect demand for SKF to be slightly lower sequentially in Q2," Chief Executive Tom Johnstone said on Tuesday in a presentation at a capital markets day in Nieuwegein in the Netherlands.

"We see the tunnel now ..., (but) I think we still have a bit of road to go before we see the light."

The economic slump spawned by the global financial crisis has impacted the Swedish engineering sector in recent months, sending manufacturers such as SKF rushing to cut costs and jobs and scale back production.

But the freefall in demand seen at the end of last year has shown signs of bottoming out.

"We see different things in different businesses," Johnstone told Reuters on the sidelines of the analysts meeting.

"I would say (demand from) the car business, the vehicle service market business, is levelling off. But in areas like the industrial business, we still see a sequential easing."

SKF, whose bearings are used in everything from industrial tools to wind turbines, posted a 26.9 percent year-on-year fall in sales volumes in the first quarter.

Johnstone expects a similar rate of decline in the second quarter, affirming a forecast issued with the group's first-quarter results last month.

Chief Financial Officer Tore Bertilsson said SKF was also sticking to its guidance for currency movements, mainly a weaker Swedish crown EURSEK= SEK=, to boost operating profit by 300 million Swedish crowns ($39.2 million) in the second quarter and by 1 billion in the year as a whole.

SKF said in a separate statement it had bought the remaining 51 percent of shares in U.S.-based seals company Macrotech Polyseal Inc. for an undisclosed sum.

At 1234 GMT, SKF B shares were up 4.2 percent at 93.50 crowns.

(Reporting by Victoria Klesty; writing by Niklas Pollard; Editing by Hans Peters, John Stonestreet)