UPDATE 2-BASF thrives on soaring oil prices, market cool

(Adds analyst's comment, share price, background)

By Mantik Kusjanto

FRANKFURT, July 31 (Reuters) - BASF (BASF.DE), the world's biggest chemicals company by sales, posted a 19 percent rise in quarterly operating profit on Thursday thanks to rising oil and gas prices and strong demand for weed and fungal killers.

But the forecast-beating results failed to impress investors, sending its shares down 0.9 percent to 40.80 euros at 1135 GMT on worries over the impact of a slowing global economy on the company, which is worth about $61 billion.

"This is possibly the last very good quarter before performance more visibly responds to weakening demand in a number of product areas," said Cazenove analysts in a note.

The analysts said the strong quarter was reassuring in the short term, but questioned whether the oil and gas business -- which has thrived on soaring prices -- could offset weakness in the chemicals and plastics units suffering from soaring feedstock prices and from a weaker business in North America.

Earnings before interest, taxes and special items were 2.41 billion euros ($3.8 billion), beating the average forecast of 2.22 billion euros in a Reuters poll of 18 analysts.

"Demand for our products remains strong, and the summer lull does not seem to be very pronounced," said BASF Chief Executive Juergen Hambrecht in a statement.

"Sales prices have to be increased considerably in some cases in order to pass on significantly higher raw material costs," Hambrecht added.

STONY ROAD AHEAD

While profits at its oil and gas unit as well as the agrochemicals operations increased 44 percent and 51 percent, respectively, the chemicals business's profits fell 34 percent.

The plastics unit also saw a 14 percent decline, while the business that sells catalysts for cars and construction chemicals dropped 34 percent.

Unlike other chemicals makers, BASF has benefited from its integrated business model. The company also produces oil, so higher crude oil prices raise its profit in part of its business while increasing raw material costs at divisions that use oil-based products. BASF is also a major gas producer.

Unlike BASF, rival Dow Chemical (DOW.N) posted lower quarterly earnings as its price increases failed to offset a sharp spike in energy and raw material costs.

Other agrochemicals companies such as Syngenta (SYNN.VX), DuPont (DD.N) and Bayer (BAYG.DE) have also benefited from a global farming boom that has spurred demand for crop protection chemicals.