UPDATE 3-Severstal sees improved Q1 after year-end slip

* Sees positive signs for Q1 after lower orders year-end

* Q3 net profit $429 mln vs Reuters poll forecast $477 mln

* Q3 EBITDA $1.13 bln vs poll forecast $1.12 bln

* Q3 Revenues $4.77 bln vs poll forecast $4.73 bln

* Shares close 0.3 percent lower (Adds comments on 2012 capex)

By Alfred Kueppers

MOSCOW, Dec 8 (Reuters) - Severstal, Russia's second-largest steelmaker, expects the market to show signs of improvement early next year after its third quarter profit missed forecasts, raising hopes that domestic growth would offset a European slump.

Severstal, which sells most of its production in Russia and is less exposed to the wider downturn than some of its European counterparts, said third-quarter net profit was hit by foreign exchange losses, but there was some light breaking through the dark clouds gathered over the world economy.

"Though the global economic landscape remains uncertain and we expect lower orders from customers at the end of the year, in Q1 2012 the market is expecting some positive signs of recovery in the industry," Chief Executive Alexei Mordashov said.

Heavyweights in the $500 billion global industry have warned of uncertainty ahead in the face of weaker global demand and increasingly cautious customers. ArcelorMittal warned last month of a second-half slump.

Global steel prices have fallen from year highs hit in the spring, with one index, a global steel index ST-CRU-IDX provided to Reuters by research firm CRU, down more than 16 percent since March.

But producers in Russia, frequently less exposed to the troubled western European economy than counterparts such as ArcelorMittal, have sent out some positive signals.

"Domestic demand will support profits of domestic producers," Uralsib analyst Dmitry Smolin said.

"For Severstal, its Russia and Asia, while ArcelorMittal and global peers are exposed to developed markets."

Magnitogorsk Iron & Steel Works, Russia's third-largest steelmaker, said on Monday that it expected positive momentum to recover in the first half of next year.

In the third quarter, Severstal booked 47 percent of its revenues in Russia and 17 percent in Europe.

Severstal said it expected capital expenditure to reach about $1.7 billion next year, after saying in June it targeted 2011 capex at $2 billion.

"Our business plan approval will happen by the end of December, but you can expect it to be in the range of 1.7 billion (dollars) excluding Nord Gold," chief financial officer Alexei Kulichenko told analysts during a conference call.

IMPROVED MARGINS

The company reported third-quarter net profit of $429 million, down from $602 million in the second quarter and missing expectations of $477 million in a Reuters poll of analysts, due to $266 million of forex losses on the weaker rouble.

The company did not provide comparable profits for the year-earlier quarter to take account of divestments.

Severstal's shares reversed earlier slight gains, closing 0.3 percent lower at 403.7 roubles in Moscow and underperforming the overall MICEX index, which was up 0.55 percent.

Severstal, controlled by billionaire Mordashov, increased its nine-month core operating margin to 24.6 percent from 24.0 percent a year ago.

It sold a number of mills in the United States earlier this year.

The Russian major also reported third-quarter earnings before interest, taxation, depreciation and amortisation (EBITDA) of $1.13 billion, up from $1.11 billion in the second quarter and ahead of the $1.12 billion poll forecast.

The company's revenues were $4.77 billion, up from $4.38 billion in April-June, also ahead of forecasts.

Severstal also plans to spin off its Nord Gold mining business by late January after failing to list the shares this year.

Nord Gold's earnings before interest, taxes, depreciation and amortisation reached $379 million in the first nine months of the year, up 51.6 percent from a year ago.

Revenues in the January-September period were $797 million, up 64.3 percent.

The company did not provide separate third quarter financial figures for the business, but said that production in the July-September period rose by 15 percent year-on-year to 192,100 gold equivalent ounces.

Severstal also said the company had $2 billion in cash and cash equivalents and $1.54 billion of short-term debt. (Reporting By Alfred Kueppers; Editing by Jodie Ginsberg and Helen Massy-Beresford)