Top-end Nokia handsets are less popular in emerging markets

Restructuring costs ate into improved sales, giving it profits of 845m euros ($1.06bn; �568m) between July and September - down 4% on a year ago.

A separate report showed that Nokia made 34.5% of all 256 million mobile phones sold globally in the period.

However, Sony Ericsson was the fastest growing manufacturer, ousting Motorola.

The research, by Strategy Analytics, showed that the joint venture between the Swedish and Japanese firms had 43% annual growth, as against Motorola's 39%.

Popularity

The average selling price of Nokia phones fell to 93 euros from 102 euros in the previous quarter.

GLOBAL MOBILE PHONE SHARE - Q3 2006 Nokia: 34.5% Motorola: 21% Samsung: 12% Sony Ericsson: 7.7% LG: 6.4% Others: 16.3% Source: Strategy Analytics

This reflected the popularity of cheaper phones in emerging markets such as Africa.

Shares in the Finnish firm fell more than 5%, despite sales growing 20% to 10.1bn euros.

Nokia estimated that its share of the global mobile phone market had risen to 36% in the quarter, from 34% in the previous three-month period.

Also on Thursday, Nokia's rival Ericsson reported that third-quarter profits had risen by 17%, although this was slightly below analysts' predictions.

The Swedish firm, which specialises in phone networks, was boosted by the performance of its joint venture with Sony - especially its cybershot and Walkman handsets.