Nokia's iPhone rival due next week: sources

HELSINKI (Reuters) - Nokia (NOK1V.HE) will unveil its first touch-screen phone next week in a direct challenge to Apple's (AAPL.O) successful iPhone, two industry sources told Reuters on Friday.

LG Electronics (066570.KS), Samsung Electronics (005930.KS) and several smaller handset vendors have rolled out their own touch-screen phones over the last two years, while the first handset using Google's Android platform will also have a touch screen.

But so far, the world's top cellphone maker, Nokia, has stuck with traditional screens.

Both sources said Nokia would unveil its new phone -- code-named "Tube" -- on October 2 at an analyst and media event in London. A Nokia spokeswoman declined to comment.

"The phone is extremely important," said Gartner analyst Carolina Milanesi. "We have been waiting for the market leader to respond to Apple's iPhone for a year and a half now. There is a lot of pressure on Nokia."

Nokia shares hit 13.21 euros on Friday, down 50 percent from the start of the year in part because of the slow introduction of touch-screen models.

Milanesi said that the Finnish firm had a history of coming late to the market with innovations, and succeeding anyway.

"With 3G they were late, but they got it right. They delivered and are the market leader. They did it with slim phones. They could do it with the touch screen," she said.

Nokia, which has a strong track record in the lower-end handset market, said in July its touch-screen offering would come this year and be cheaper than rival models in order to tap into a higher-volume market.

"The demand outlook in emerging markets, like India, is good for a cheaper touch-screen phone," said Hannu Rauhala, an analyst with Pohjola Bank.

Kai Oistamo, head of Nokia's devices business, said in July the Finnish firm was committed to bringing a complete portfolio of touch devices to the market, both in the high-end and low-end segments.

"Taking into account the attention Apple has got, and good sales of LG and Samsung touch-screen phones, Nokia has to be there," said Pohjola's Rauhala. "As there is demand, there is no reason to leave it for rivals."

Nokia has used touch screens before in its Internet tablet product range, which are phone-like devices for Web surfing but lack a calling function.

The popularity of touch screens surged with introduction of the capacitive touch-screen technology, which gives higher clarity of picture and that figures in both iPhone and in LG's Prada and Secret phones.

"Demand for touch screens in mobile handsets has certainly taken off with the introduction of capacitive touch-based devices," said Andrew Hsu, an official at a U.S. touch screen technology firm Synaptics (SYNA.O).

Shares in Nokia were trading 3.

(Editing by Simon Jessop, Paul Bolding)