UPDATE 2-European recovery boosts truck maker Scania's orders
* Scania Q1 truck and bus orders 20,787 vs forecast 18,383
* Scania Q1 op. profit 1.93 bln sek vs forecast 2.1 bln sek
* Scania shares rally, other truck makers also gain (Recasts to lead on quarterly orders, adds details and company comment)
By Patrick Lannin and Helena Soderpalm
STOCKHOLM, April 23 (Reuters) - Truck maker Scania posted a rise in quarterly orders on Tuesday after key European markets revived and Latin American demand rose, buoying stocks across the sector on hopes the worst of the downturn might be over.
Scania's orders rose 28 percent in the first quarter year-on-year for trucks and were close to unchanged over the fourth quarter of 2012, compensating for a bigger-than-expected drop in first quarter earnings to 17 percent.
Despite pressure on prices and the strong Swedish crown, which weighs heavily on earnings made in foreign currency, the company expressed some optimism about the European market.
"We are seeing growing orders in many major markets, mainly in northern and central Europe, such as the UK, Germany, the Nordic region, Poland, and France has started okay," Scania chief executive Martin Lundstedt told a news conference, adding that southern European states had seen no recovery.
European truck makers have been squeezed by weak demand over the past year after an economic downturn in the region, triggered by the euro zone's debt crisis, left customers and lenders wary of investment in new commercial vehicles.
Scania shares rose 5 percent after Tuesday's news and rival Swedish group Volvo gained 3.5 percent. Daimler, , the world's biggest truck maker, edged up almost 1 percent.
Overall, Scania's order bookings came to 20,787 trucks and buses in the first quarter, beating the Reuters poll forecast for 18,383..
Of Scania's first-quarter bookings, 44 percent came from Europe and almost 32 percent from Latin America. European truck orders rose 13 percent on the year while Latin America doubled.
As with other manufacturers, emerging markets helped Scania during the European downturn and the Swedish company said it had seen higher volumes and capacity utilisation in Latin America, where tax incentives for buyers boosted demand. Growth was also helped by comparisons to low orders in the previous quarter, when Scania introduced a new generation of engines.
Operating profit at Scania, majority owned by Germany's Volkswagen,, fell to 1.93 billion Swedish crowns ($295.6 million) from a year-ago 2.32 billion to undershoot a mean forecast of 2.08 billion seen in Reuters poll of analysts.
"The stronger Swedish crown and price pressure on trucks pulled down earnings," the company said in a statement. The crown has appreciated against the euro and other countries due to the Nordic' state's relatively strong economic performance.
Scania has cut costs and scaled back its production after the drop in demand and Lundsted said the company continued to maintain staffing flexibility. The company is, at the behest of VW, in co-operation talks with rival MAN SE as VW aims better to challenge Daimler.
Scania is the first of Europe's major heavy-duty truck makers to report on the first quarter. Daimler, Volvo and MAN SE are all due later in the week. ($1 = 6.5285 Swedish crowns) (Reporting by Niklas Pollard and Helena Soderpalm; Editing by Sophie Walker)
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