* PKN Q3 net at $428 mln, versus $406 mln expected
* Reiterates to pay first dividend since 2008
* Cuts debt to $1.84 bln from $2.56 bln at end-Q2
* Shares rise 1 pct in flat market (Adds quote from CFO, detail, market reaction)
WARSAW, Oct 25 PKN Orlen, Poland's largest oil refiner, swung to a better-than-expected third-quarter net profit on high refining margins and a stronger local currency that helped reduce the size of its foreign-denominated debt.
The state-controlled group also stuck to plans to pay a dividend for the first time since 2008, pushing its share price up 1.1 percent versus a 0.1-percent decline of Warsaw's large-cap index WIG20.
PKN's July-September net profit of 1.37 billion zlotys ($428 million) came after a net loss of 5 million zlotys in the second quarter and a shortfall of 258 million a year earlier. Analysts had expected 1.3 billion zlotys.
Helped by high cashflows and a strong zloty, PKN cut its debt to 5.9 billion zlotys from 8.2 billion at the end of the second quarter, a level last seen in 2006 before its acquisition of Mazeikiu, Lithuania's only refinery.
"From the financial point of view, our situation is relatively strong, however what we can see in the next (fourth) quarter is still unpredictable," PKN's Chief Financial Officer Slawomir Jedrzejczyk told an analyst conference.
"But definitely, with these numbers, we think seriously with the management board to have a recommendation for a dividend payout."
He added the group needs several more weeks to finish work on an update to its strategy, which will include a definition of its dividend policy.
PKN's results also boosted the share price of fellow refiner Lotos, which is due to publish its results on next Tuesday, brokers said. At 1217 GMT, Lotos shares were up 2.8 percent. ($1 = 3.2007 Polish zlotys) (Reporting by Pawel Bernat and Maciej Onoszko; Editing by Dan Lalor and Hans-Juergen Peters)