UPDATE 1-Indonesia's Inco says Q3 net profit up 3.21 pct

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JAKARTA, Oct 29 (Reuters) - PT International Nickel Indonesia Tbk (INCO.JK) reported a 3.21 percent rise in third-quarter net profit on Thursday thanks to a recovery in nickel prices.

PT Inco -- in which Brazil's Vale Inco Ltd (VALE5.SA), one of the world's top nickel producers, has a 60.8 percent stake -- said net profit for July-September rose to $75.88 million from $73.515 million in the year ago period.

But the firm's revenue dropped 20.17 percent to $249.84 million in the third quarter of this year, from $312.95 million a year ago.

Higher production and higher nickel prices were major drivers to the firm's better earnings, Arif Siregar, the firm's president director said.

The firm sold 18,653 tonnes of nickel in matte in the third quarter, down 5.3 percent from a year ago. It produced 17,800 tonnes of nickel in matte in the third quarter, compared to 19,078 tonnes in the same period last year.

The firm's average nickel prices were $13,394 a tonne during the third quarter, down from $15,888 a tonne in the same period last year, but up from $8,894 a tonne in the second quarter.

PT Inco expected this year's nickel output to be 20 percent lower than last year at around 59,000-60,000 tonnes.

Nickel prices MNI3 at the London Metal Exchange traded at $17,680 a tonne on 0700 GMT Thursday, up 51 percent so far this year but still two-thirds below the record high of $51,800 a tonne hit in May 2007. ($1 = 9,580 rupiah) (Reporting by Andreas Ismar; Writing by Fitri Wulandari; Editing by Sara Webb)