UPDATE 1-Akzo Nobel announces $556 mln share buyback as core profit jumps

(Adds CEO quotes, outlook and more detail)

AMSTERDAM, Oct 23 (Reuters) - Dutch paints and coatings maker Akzo Nobel NV on Wednesday announced a 500 million euro ($556 million) share buyback, after reporting a 23% jump in third-quarter core profit driven by cost saving measures and higher product prices.

Akzo reported an adjusted operating income of 300 million euros for the three months through September, slightly below the average expectation of analysts polled by the company.

“Our profit improvement in the third quarter was strong, even though we had to deal with softer end market demand”, Chief Executive Officer Thierry Vanlancker said.

Akzo makes the Dulux and Flexa brand of paints and supplies to sectors ranging from aerospace to cars and yachts.

This makes it vulnerable for the global industrial slowdown, and the problems in the auto sector especially, as it continues to be hurt by the U.S.-China trade rows.

“Demand has been muted in most markets,” Vanlancker said. “That did not change in the last quarter and we don’t expect it to change significantly next year.”

Weak demand pushed total sales volumes down 4% in the third quarter, but higher product prices helped revenues up 3% to 2.4 billion euros - beating analysts’ expectations.

Akzo maintained its target of increasing return on sales to 15% by 2020, as the margin improved to 12.5% in the third quarter. Overall cost savings were on track to reach 200 million euros next year, Vanlancker said. ($1=0.8992 euros) (Reporting by Bart Meijer; Editing by Clarence Fernandez and Rashmi Aich)