STOCKS NEWS EUROPE-Outokumpu gains on ore reserves, nickel outlook

HELSINKI, Jan 16 (Reuters) - Shares in Finnish steel firm Outokumpu (Other OTC: OUTKF - news) rise 6 percent, extending recent gains after the company raised its estimates on ore reserves and the market forecast higher nickel prices ahead.

Loss-making Outokumpu, hit hard by Europe's economic slowdown and by overcapacity in the industry, saw its stock falling about 50 percent during 2013.

"Seems like there's a general theme in the market to look for stocks that performed poorly last year," says Mikael Doepel, analyst at Handelsbanken in Helsinki.

Outokumpu is considered a beneficiary of Indonesia's recent ban on unprocessed mineral exports, as the move is expected to lift the price of high-quality nickel and raise restocking demand for stainless steel.

Analysts also cite Outokumpu's announcement earlier this week that its proven ore reserves at a Finnish mine were around 50 million tonnes, 50 percent more than an earlier estimate.

Outokumpu shares have now climbed about 21 percent since the beginning of the year to 0.5 euros.

Some analysts warn that it may be overpriced, particularly when considering the company, helped by the state of Finland, is due to arrange a 650 million euro rights issue this quarter as a result of an asset sale and recapitalisation plan it laid out last year.

"Looks (BSE: LOOKS.BO - news) like investors have forgotten the upcoming rights issue and the company's negative gross margin in Q3," says Sauli Vilen, analyst at Inderes Equity research.