UPDATE 2-Canada's Norbord posts narrower-than-expected Q3 loss

* Q3 loss $0.16/shr vs est $0.17/shr

* Q3 sales fall 25 pct (Adds analyst comment, detail)

By Isheeta Sanghi

BANGALORE, Oct 30 (Reuters) - Producer of wood-based panels Norbord Inc (NBD.TO) posted a narrower-than-expected quarterly loss, helped by a seasonal increase in North American oriented strand board (OSB) prices.

For the third quarter, Norbord posted a loss of $7 million, or 16 cents a share, compared with a loss of $18 million, or $1.21 a share a year ago.

Net sales for Norbord, one of the world's largest producers of OSB, an engineered wood product used in home construction, fell to $192 million from $256 million in the year-ago period.

Analysts on average were expecting the company, which also manufactures plywood and a range of other engineered wood products, to post a loss of 17 cents a share on revenue of $195.7 million, according to Thomson Reuters I/B/E/S.

At the end of the quarter, Norbord had unutilized liquidity of $229 million consisting of cash and cash equivalents, revolving bank lines and a debt facility.

Norbord's tangible net worth was $344 million and net debt-to total-capitalization was 58 percent at the end of the quarter.

RBC Capital Markets analyst Paul Quinn said the company's fourth quarter is expected to be weak but its liquidity position is in good shape.

"I think the company has more than enough liquidity to get through a challenging fourth quarter and first quarter. I think it's slow, steady progress there," Quinn said.

Chief Executive Barrie Shineton said looking ahead, most market indicators remain weak.

"In my view, high unemployment and restrictions on credit availability for first time home buyers in the U.S. and the UK will continue to impact housing and panel demand," Shineton said in a statement.

The CEO said he expects it will take six to twelve months for these trends to reverse and meaningful improvement to occur in new home construction.

Shares of the Toronto-based company, which have gained 70 percent in value over the past three months, were trading down more than a percent at C$15.01 during morning trade on the Toronto Stock Exchange. (Reporting by Isheeta Sanghi in Bangalore; Editing by Maju Samuel)