UPDATE 2-Kuehne & Nagel sees higher freight volumes in Q4

* CFO says sea, air freight volumes up in Q4

* Sees first signs of recovery in seafreight in Q3

* Q3 profit falls 10 pct to 130 mln Sfr

* Average estimate in Reuters poll was 117 mln Sfr

(Adds CFO comment)

ZURICH, Oct 20 (Reuters) - Swiss logistics group Kuehne & Nagel (KNIN.VX), hit by lower demand amid the economic downturn, forecast volumes in sea and air freight would rise in the fourth quarter, after it saw signs of recovery in the preceding three months.

Chief Financial Officer Gerard van Kesteren told Reuters final-quarter volumes would be higher compared with the same quarter last year with Christmas trade volumes expected to be significantly higher. The company on Tuesday posted a better-than-expected 10 percent drop in third-quarter net profit.

"During the first half of the year, the international seafreight market was characterised by significant volume declines; the third quarter, however, saw the first signs of recovery," the group said in a statement.

Kuehne & Nagel as well as rivals Panalpina (PWTN.S) and Deutsche Bahn's Schenker [DBN.UL] saw demand for logistics services crumble during the downturn as retailers stopped ordering new stocks and manufacturers curbed their production of goods.

The WTO expects world trade to shrink 10 percent this year but there have been signs the trade contraction has started to bottom out.

Net profit slipped to 130 million Swiss francs ($128.3 million) for the third quarter, ahead of the average estimate of 117 million francs in a Reuters poll of 11 analysts. [ID:nLF349731]

"Leveraging its broad geographic reach and its value-adding product portfolio, Kuehne + Nagel was able to expand market shares in almost all trade lanes," it said.

Kuehne & Nagel trades at around 20 times 2010 earnings, at a premium to Panalpina at around 18 times. ($1=1.013 Swiss Franc) (Reporting by Katie Reid and Silke Koltrowitz; Editing by Jon Loades-Carter)