UPDATE 1-Union Pacific profit rises, beats Wall St view

(Adds details, company comment)

CHICAGO, Oct 18 (Reuters) - No. 1 U.S. railroad Union Pacific Corp (UNP.N) posted a better-than-expected jump in quarterly profit on Thursday due to higher freight volumes and strong pricing.

But the railroad warned that in the short-term it was cautious about the shape of the U.S. economy and challenges posed by higher fuel prices.

The Omaha, Nebraska-based company reported third-quarter net income of $532 million or $2.00 per share, compared with $420 million or $1.54 per share a year earlier.

Wall Street analysts had on average expected earnings per share for the quarter of $1.77, according to Reuters Estimates.

Union Pacific said revenue in the third quarter rose to $4.19 billion from $3.98 billion a year earlier. Analysts had expected revenue of $4.21 billion.

Revenue in all the railroad's freight commodity classes was up except for industrial products, where revenue fell 4 percent.

Union Pacific Chief Executive Jim Young said in a statement that despite the strength of the third quarter, "near-term we remain cautious on the economy and see challenges from rapidly increasing diesel fuel prices."

In light pre-market trading Union Pacific shares were up nearly $1.02 at $120 from Wednesday's official close on the New York Stock Exchange of $118.98.

(Reporting by Nick Carey)

((Editing by Dave Zimmerman; Reuters Messaging: nick.carey.reuters.com@reuters.net; email: nick.carey@reuters.com; +1-312-408-8756))

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