UPDATE 1-Financial sector woes hurt Int'l Paper's volumes

(Adds details, CFO comments, share price move)

By Euan Rocha

NEW YORK, April 30 (Reuters) - The U.S. financial sector's woes are hurting International Paper Co's (IP.N) printing paper shipment volumes, Chief Executive John Faraci said on Wednesday.

"In printing papers we certainly saw that the end of March was certainly slower than January and February," Faraci said on a conference call. "There is no question the economy has slowed and it's having an impact on commercial printing."

"There are less solicitations for credit cards, less solicitations for home equity loans. So business with Capital One and Citigroup is way down and we are seeing the impact of that," he added.

Citigroup Inc (C.N) and Capital One Financial Corp (COF.N) are among the major clients International Paper supplies with products for both direct mailing and internal company use.

Earlier in the day, the paper and packaging products maker posted first-quarter results that fell short of Wall Street's expectations, as pricing gains failed to offset the escalation in raw material costs.

The Memphis, Tennessee-based company's results were also hurt as its uncoated paper shipment volumes fell 7 percent in North America and 1 percent in Europe.

Chief Financial Officer Tim Nicholls said the decline in domestic printing paper volumes was also linked to increasing number of job cuts by banks and brokerage firms.

"It's everything from more unemployment in that segment of the economy, to the types of direct mailing that financial institutions send out to people, regarding credit card availability and promoting services," Nicholls said in an interview with Reuters.

Citigroup, Wachovia Corp WB.N, Merrill Lynch & Co MER.N, along with many other financial institutions, have already announced a number of job cuts. More are expected.

A recent report from New York's Independent Budget Office said the city could lose more than 20,000 jobs in the high-paying financial sector over the next two years.

Faraci said the sharp pull-back in financial sector demand is a direct reflection of the problems the sector is facing.

Shares of International Paper were down almost 5 percent at $26.03 in afternoon trade on the New York Stock Exchange. (Editing by Tim Dobbyn and Braden Reddall)