The Lumia 925 is the latest in Nokia’s range using
Microsoft’s Windows Phone software and will be sold for
469 euros ($610) before taxes and subsidies through carriers
such as Vodafone and China Mobile.

Nokia Chief Executive Stephen Elop has pinned the future of
the loss-making company on Windows Phone, hoping to reverse a
dramatic drop in revenue over the last two years.

The phone weighs 139 grams, compared with 185 grams for the
earlier 920 model, which some critics had said was too heavy. It
also utilizes a new smart camera mode, a photo editing function
which Nokia intends to introduce to all Lumia devices.

“Lumia 925 looks like a solid product and should be able to
attract new customers who have considered 920 too bulky for
their taste,” said Nordea analyst Sami Sarkamies.

“One can think of Lumia 925 as a new version of Lumia 920
that has been put on a diet to fit inside an iPhone-like frame.”

Nokia has recently launched new products in the lower and
mid-tier range to protect its position in emerging markets, but
its success in the high-margin smartphone market will be crucial
to its long-term survival.

The company unveiled the slightly heavier Lumia 928 for the
U.S. market last Friday. It was priced at $99 after a rebate and
a two-year deal with Verizon Wireless .

Both the Lumia 925 and 928 are targeted at the high-end,
flagship segment, which accounts for 35 to 40 percent of the
total global market, said Jo Harlow, Nokia’s executive vice
president for smart devices.

“Our goal is to have a complete portfolio across the price
range,” she told Reuters, adding that Nokia expects to see
accelerated growth in sales of Lumia phones.

Sales of Lumia phones have grown in recent quarters, but at
5.6 million in first quarter, they still account for only around
5 percent of the market.

Research company Gartner said on Tuesday that Nokia lost 5
percentage points of market share in the first quarter, falling
to 14.8 percent of all mobile phones compared to number one
Samsung’s 23.6 percent share. Nokia held a 19.7 percent share
just a year ago.

Nokia’s announcement of the Lumia 925 came just days after
it unveiled the Asha 501, a $99 handset with a touch-screen and
some Internet access, including built-in applications for sites
such as Facebook.

The Asha 501 is aimed at a growing, middle-class population
in emerging markets who like smartphones but can’t afford
high-end models.

“The mid and low end of the smartphone segment is where the
most growth will be in the coming years,” said Francisco
Jeronimo, analyst at technology research firm IDC, adding that
Apple and Samsung have already cornered the high-end market.

“The high end is a very tough segment to enter and to
compete in. You have to have huge marketing budgets.”

IDC estimates that smartphones under $149 accounted for the
fastest sales growth last year, with sales up 270 percent from a
year earlier. That compared with a 4 percent fall in the
$300-499 price category.

Investors said the Asha 501 was a sign Nokia was paying
attention to consumers who will soon be upgrading from basic
handsets to more sophisticated phones.

Nokia has also recently started selling a lower-spec Lumia
521, sold as the 520 in other markets, for under $150 at Walmart
in the United States.

It launched a 15-euro basic phone earlier this year, aimed
at first-time buyers, although analysts were less bullish about
this handset due to lower margins.

IDC’s Jeronimo said that with new phones at various price
points, Elop had no excuse for weak sales in coming quarters.

Shares in Nokia were down 3.6 percent to 2.84 euros by 1310
GMT, valuing the company at 11 billion euros.

Many shareholders at the annual general meeting in Helsinki said Elop should reconsider his 2011 decision to switch to the phone operating software made by his former employer Microsoft, which has left the company scrambling to get back in the race from a standing start with its new Lumia range of smartphones.

“You’re a nice guy … and the leadership team is doing its best, but clearly, it’s not enough,” one shareholder, Hannu Virtanen, told Elop. “Are you aware that results are what matter? The road to hell is paved with good intentions. Please switch to another road,” he said.

The transition to Windows Phone from Nokia’s own Symbian system was meant to take two years. That period is now over, and while recent results have shown growth in sales of Lumia smartphones using Windows Phone 8 software, the volumes pale in comparison with the top Samsung and Apple models, and sales of its regular mobile phones have plunged in the meantime.

Nokia shares have also plunged, now trading at 2.72 euros, a fraction of their 65-euro peak in 2000.

Asked why they still held Nokia stock despite poor results and a suspension in annual dividends, some older attendants at the AGM admitted to being sentimental about a firm that symbolized Finland’s rebirth after the collapse of the Soviet Union in the early 1990s, its main trading partner.

Institutional investors have been less willing to cling on; Finnish pension fund Ilmarinen, its second-largest shareholder, recently revealed it had cut its stake by 27 percent in the first quarter.

NO PLAN B

Elop on Tuesday reiterated the company’s commitment to Windows Phone software.

“We make adjustments as we go. But it’s very clear to us that in today’s war of ecosystems, we’ve made a very clear decision to focus on Windows Phone with our Lumia product line,” he said. “And it is with that that we will compete with competitors like Samsung and (Google’s operating system) Android.”

Juha Varis, senior portfolio manager at Danske Capital, which owns Nokia shares, said Elop may be making a mistake.

“He has closed doors,” he said in a phone interview. “They don’t have new ideas now. Their fate is all in Windows Phones.”

Some analysts have also been critical, saying Lumia sales were not strong enough to ensure the company’s survival.

Nokia sold 5.6 million units of Lumia handsets in the first quarter. That was up from 4.4 million in the previous quarter, but its market share was still only about 5 percent, with Apple and Samsung together controlling over half the market.

“He’s managed to decrease costs but not to increase market share,” said Magnus Rehle, senior partner in Greenwich Consulting, which advises telecoms companies.

“Maybe they could go back to Google and say we also want to go with Android. Even if it hurts. Microsoft, they’ve had their chances, and are not managing to take off,” he said.

CHEAPER SMARTPHONES

In the absence of a Plan B, analysts said Nokia’s best bet would be to focus on selling cheaper smartphones, or feature phones with some smartphone capabilities such as its higher-end Asha handsets, in emerging markets.

Sources also say it will soon begin selling new, higher-end Lumia phones through Verizon Wireless in addition to its current partnership with AT&T.

But few expect it to help Nokia gain significant share in the U.S. smartphone market any time soon.

“Their best chance of success isn’t going head to head with Apple. We think it will be in the mid-range,” said Morningstar analyst Brian Colello in Chicago.

“That’s $300 rather than the $600 models. That’s where customers in emerging markets and first-time buyers will be looking.”

Analysts were more hopeful about prospects for Nokia’s Lumia 521, a low-end smartphone, due to go on sale at Walmart later this month at an unsubsidized price of under $150.

“They’ve lost the battle in expensive smartphones to Apple and Samsung. And at the low end, they have very strong competition from the Chinese. But there’s still a possibility to fight in emerging markets,” Rehle said.

Elop said Nokia would announce new Asha models soon. He is due to attend a news conference in New Delhi on Thursday.

(Editing by Will Waterman)

Both Telia and Elisa, like other European peers, have been
squeezed by price pressures, falling voice call revenues and a
failure to turn surging data traffic into profit growth.

Sweden-based Telia said it would focus on cutting costs
after quarterly earnings before interest, tax, depreciation and
amortisation (EBITDA), excluding one-offs, fell to 8.5 billion
Swedish crowns ($1.3 billion) from last year’s 8.9 billion,
missing the average forecast of 8.6 billion in a Reuters poll.

Finnish operator Elisa lowered its outlook for the year
after first-quarter profit fell more than expected, citing
weaker corporate technology spending and tougher competition in
mobile and Internet subscriptions.

The company’s quarterly “churn” rate, which measures
cancellations, rose to 20.0 percent from 19.3 percent in the
previous quarter.

Telia’s sales fell 4.5 percent to 24.5 billion, also shy of
an expected 25.2 billion. Its revenue has been under pressure in
recent years despite an expansion into markets such as
Kazakhstan, Nepal and Azerbaijan, due to weakness in the Nordic
region and the Baltics.

The company repeated its outlook for flat sales in local
currencies and said cost cuts would help to slightly improve
margins this year.

“We have continued to put significant emphasis on
implementing the efficiency measures initiated at the end of
last year,” Chief Executive Per-Arne Blomquist said in a
statement.

“We remain determined to bring total costs down by 2 billion
crowns net over a two year period.”

At Elisa, slower economic growth and lower employment rates
have meant few businesses are adding fixed-line services, even
though Elisa has been trying to make up for that decline with
services such as online conferencing.

Its first-quarter EBITDA fell to 109 million euros ($142.6
million) from 121 million a year earlier, below the average
forecast of 116 million in a Reuters poll.

The company said it expects full-year EBITDA, excluding
items, to be at the same level or slightly lower than in 2012,
having previously forecast the figure to be flat.
($1 = 6.5180 Swedish crowns)
($1 = 0.7644 euros)

(Editing by Miral Fahmy and David Holmes)

Both Telia and Elisa, like other European peers, have been
squeezed by price pressures, falling voice call revenues and a
failure to turn surging data traffic into profit growth.

Sweden-based Telia said it would focus on cutting costs
after quarterly earnings before interest, tax, depreciation and
amortisation (EBITDA), excluding one-offs, fell to 8.5 billion
Swedish crowns ($1.3 billion) from last year’s 8.9 billion,
missing the average forecast of 8.6 billion in a Reuters poll.

Finnish operator Elisa lowered its outlook for the year
after first-quarter profit fell more than expected, citing
weaker corporate technology spending and tougher competition in
mobile and Internet subscriptions.

The company’s quarterly “churn” rate, which measures
cancellations, rose to 20.0 percent from 19.3 percent in the
previous quarter.

Telia’s sales fell 4.5 percent to 24.5 billion, also shy of
an expected 25.2 billion. Its revenue has been under pressure in
recent years despite an expansion into markets such as
Kazakhstan, Nepal and Azerbaijan, due to weakness in the Nordic
region and the Baltics.

The company repeated its outlook for flat sales in local
currencies and said cost cuts would help to slightly improve
margins this year.

“We have continued to put significant emphasis on
implementing the efficiency measures initiated at the end of
last year,” Chief Executive Per-Arne Blomquist said in a
statement.

“We remain determined to bring total costs down by 2 billion
crowns net over a two year period.”

At Elisa, slower economic growth and lower employment rates
have meant few businesses are adding fixed-line services, even
though Elisa has been trying to make up for that decline with
services such as online conferencing.

Its first-quarter EBITDA fell to 109 million euros ($142.6
million) from 121 million a year earlier, below the average
forecast of 116 million in a Reuters poll.

The company said it expects full-year EBITDA, excluding
items, to be at the same level or slightly lower than in 2012,
having previously forecast the figure to be flat.
($1 = 6.5180 Swedish crowns)
($1 = 0.7644 euros)

(Editing by Miral Fahmy and David Holmes)

The Finnish mobile phone maker also reported an unexpected fall in sales at its previously upbeat equipment venture Nokia Siemens Networks.

Nokia, which has fallen behind Samsung and Apple in the smartphone race, said it sold 5.6 million units of Lumia handsets in the first quarter, up from 4.4 million in the previous quarter and in line with expectations.

But overall net sales fell 20 percent to 5.9 billion euros from a year earlier, while phone volumes tumbled 30 percent on the previous quarter.

It forecast margins in its devices and services business would be “approximately negative 2 percent” in the second quarter, down from a positive 0.1 percent in the first quarter.

“The shortfall is in the (cheaper) mobile phone side, where both volumes and average selling prices came lower than expected. That is of course a bit worrying, since that has been their bread and butter business in the Devices and Services unit,” said Hakan Wranne, analyst at Swedbank.

“I think we will see the market’s profit estimates for 2014 come down,” he added.

Nokia shares were down 9.5 percent at 2.385 euros at 1058 GMT, having been as low as 2.30 euros, a far cry from their 65-euro peak in 2000 and even the 4-5 euros many analysts see as the sum value of the company’s parts, which include its handset business, Navteq mapping unit and stake in NSN.

Investors have been growing impatient about seeing results from Chief Executive Stephen Elop, who was hired in 2010 to lead a turnaround and took the decision to switch to the untried Windows software in early 2011.

Elop had said the transition would take about two years, a period that’s now over, raising questions about how much longer he has to show the company is on the right track.

“Basically, he has only the second quarter,” said Mikko Ervasti at Finnish investment banking and wealth management group Evli.

The company has been bleeding cash in the meantime and was forced to cancel its dividend and sell and lease back its headquarters to boost its coffers, though its net cash position by the end of March had unexpectedly improved to 4.5 billion euros from 4.4 billion three months earlier.

The company’s first-quarter underlying loss, which excludes special items, decreased to 0.02 euros from 0.08 euros a year earlier. Markets had expected a 0.04 loss, according to a Reuters poll.

While Nokia still sells more regular mobile phones than smartphones, its future depends on higher-margin smartphones as a growing number of global consumers want access to apps such as Twitter from their handsets.

The smartphone industry’s top two players show little sign of ceding market share. A Reuters survey showed the market estimates Samsung shipped around 61.6 million smartphones in the first quarter, while Apple shipped 36.9 million iPhones.

Samsung’s Galaxy S4 is set to go on sale later this month and is expected to outsell its predecessors with monthly sales of around 10 million.

(Editing by Will Waterman)

Quarterly results on Thursday are also expected to show a turnaround at communications equipment venture Nokia Siemens Networks (NSN), bolstering Nokia’s bottom line and supporting the shares’ recovery from last year’s record low.

While analysts say Nokia has yet to prove it can survive in an industry increasingly dominated by Samsung and Apple, a slow but steady improvement in finances may buy more time for Canadian chief executive Elop as he attempts to implement his turnaround strategy.

Nokia is pinning its hopes on Lumia phones, which use Microsoft’s Windows software. Since signing a deal late last year to sell Lumias in China, it has launched cheaper versions of the smartphone to cater to a global market of price-conscious but tech-savvy consumers.

While Nokia recently launched 15-euro phones to shore up its position in basic handsets, its long-term success is seen as hinging on smartphones, both due to their higher margins and because more consumers, including those in emerging markets, are demanding access to apps like Twitter from their phones.

“Its visibility is really poor, and of course there’s still a possibility that the Windows strategy will fail. We don’t know,” said Michael Schroder at Finnish investment group FIM.

“But the base case assumption now is that volumes will gradually come up as the geographical coverage distribution gets wider and product portfolio moves towards lower price points.”

While that is hardly a bullish endorsement, it underscores a shift in the market’s view of the Finnish mobile phone marker, which a few quarters ago was under pressure to drop its Windows Phone strategy, as well as its CEO, if sales failed to pick up.

Analysts on average forecast first-quarter net sales to fall 11.8 percent from a year earlier to 6.48 billion euros ($8.49 billion), according to a Reuters poll, a more moderate decline than the 19.6 percent drop reported in the previous quarter.

Quarterly shipments of Lumia phones are seen at 5.6 million units, up from 4.4 million in the fourth quarter.

NSN GAINS STRENGTH

Nokia’s underlying loss, which excludes special items, is seen shrinking to 0.04 euros per share from 0.08 euros per share a year earlier.

Another key factor behind the recovery is NSN. Once a cash drain for co-parents Nokia and Siemens, NSN is now profitable thanks to massive restructuring.

While it still faces tough competition from global rivals such as Huawei and Ericsson, sales have picked up with its focus on fourth-generation (4G) Long Term Evolution (LTE) networks paying off.

The turnaround has also raised hopes that NSN may be ready to be sold or publicly listed soon. The co-parents’ agreement over the venture lapsed earlier this month, freeing both parties to sell their stakes without consulting each other.

Nokia is seen as being in no hurry to sell its stake, given that the unit is bringing in cash. The company’s net cash position was 4.4 billion euros at the end of 2012, and is expected to have fallen to 3.7 billion by end-March.

“We partly see it as the most valuable operating unit,” said Nordea analyst Sami Sarkamies of NSN. “But I don’t think Nokia is in any rush for the time being. They may actually be quite happy waiting, and maybe an IPO next year is more something Nokia is interested in.”

With the possibility of a deal on the horizon, stronger-than-expected results from NSN could boost the market’s valuation of Nokia.

The shares traded on Monday around 2.63 euros — nearly double their lifetime low of 1.33 euros marked in 2012 but still lower than the 4-5 euros many analysts see as the value of the company’s “sum of parts” including its handset business, Navteq mapping unit and stake in NSN.

FIM’s Schroder has a target of 4.00 euros on the shares. “When looking at sum of parts it’s significantly higher. But of course you have to have a discount, with all the uncertainty,” he said.

(Editing by Mark Trevelyan)

Talvivaara shares fell more than 4 percent in Helsinki and
London on Friday after Finnish pension insurance firm Ilmarinen,
which had owned 5.08 percent of the company’s stock at the end
of March, said it had sold its investment.

“The decision was impacted by the weaker-than-expected
financial success and repeated environmental and production
problems, especially during the past year,” said Ilmarinen’s
Timo Ritakallio, deputy CEO and chief investment officer.

Over the past year, Talvivaara’s operations have been hit by
two waste water leaks, excess rain water and the death of a
worker. Last year, it cut its annual production target several
times and reported an operating loss of 57 million euros in the
fourth quarter.

Talvivaara’s 261-million-euro ($343 million) rights issue
was aimed at keeping the mine in Sotkamo, eastern Finland,
running after the repeated setbacks and clean up costs depleted
its coffers.

The rights issue was oversubscribed, but investors were
allowed to cancel following the latest leak, discovered on
Sunday, which prompted it to shut down its metals plant. Final
results of the cash call are due early next week.

Talvivaara’s Chief Financial Officer Saila Miettinen-Lahde
declined to comment on whether there were other cancellations.
The cancellation period ends in London on Friday evening.

“The issue process is still ongoing and the only thing I can
say is that the results will be announced when they are ready,
early next week,” she said.

The rights issue is backed by Talvivaara’s three top owners,
CEO and founder Pekka Pera, Finnish government investment firm
Solidium and mutual pension insurance firm Varma, and is
underwritten by five banks.

FIM analyst Markus Liimatainen said it was likely some other
investors had also cancelled their subscriptions.

“As a signal, it is not positive,” he said.

Talvivaara shares traded at 0.16 euros in Helsinki and 13.5
pence in London around 0730 GMT, close to their record lows
marked on Monday.

($1 = 0.7618 euros)

(Editing by Tom Pfeiffer and Mark Potter)

The lapsing of the shareholder pact frees the co-parents to sell all or part of their 50-percent stakes in NSN without consulting the other. Some financial analysts who specialize in the technology sector had said a deal could be possible as early as this month after Siemens executives set up an exploratory committee earlier this year.

Sources at both Siemens and the Finnish handset maker said no deals – including a stock exchange listing or buyout – were imminent, however.

German industrial bellwether Siemens has been more outspoken than Nokia about its desire to sell its stake in the joint venture to focus on its core business. It booked a 741 million-euro equity investment loss at NSN last year.

Nokia has also made no secret of wanting to let go of NSN so it can concentrate on its ailing mobile phone business. It recently cancelled dividends and sold, then leased back, its company headquarters to save cash.

MORE TIME NEEDED FOR IPO

Taking NSN public was “the ideal solution,” said one banker who has been involved in technology sector deals, declining to be named as he was not authorized to speak on the matter.

Such a move would have been unthinkable a year ago as competition from Chinese rivals such as Huawei HWT.UL hit its margins and a weak global economy discouraged dampened spending on telecommunications equipment.

After a massive restructuring drive including staff cuts and asset sales, NSN’s operating and gross margins have risen in recent quarters. By the end of 2012 it was contributing to Nokia’s cash flow instead of draining it, and Nokia said NSN was making “progress towards becoming a more independent entity”.

In interviews with Reuters and in research reports, most financial analysts who specialize in the sector said that investors would want to see a few more quarters of improvement before buying NSN shares, however. Most pin NSN’s value at around 6 to 10 billion euros.

Canaccord Genuity analyst Michael Walkley cut his price target on Nokia this week on worries Samsung was eating into its mobile market share, but he was upbeat about NSN. He estimated its value at around 8.9 billion euros, 0.55 times expected sales for 2013. Morgan Stanley has said it sees NSN’s value at 0.4-0.6 times 2013 sales.

He noted NSN was becoming a leading supplier of Long Term Evolution (LTE) high speed data devices after winning contracts with carriers upgrading their mobile Internet infrastructure, particularly in North America but also Japan and Korea.

“On a macro level, the market’s only going to support three mobile broadband players. And we think it will be Ericsson, Huawei and the third one will be Nokia Siemens, given their execution,” Walkley told Reuters.

But he said an initial public offering would take time.

“They’re still going through restructuring,” he said. “It may take another two to three quarters to show… it’s a sustainably profitable company.”

SALE TO PRIVATE EQUITY OR RIVAL

Other possible scenarios include selling to private equity. Such firms shunned NSN when the co-parents tried unsuccessfully to sell it in 2011, but NSN’s turnaround could attract interest.

The analysts said that a buyout by an industry rival was also possible, although few were willing to name potential buyers other than Alcatel-Lucent (ALUA.PA: Quote, Profile, Research, Stock Buzz). European governments were likely to oppose Chinese manufacturers over security concerns.

Some said a combination of Alcatel-Lucent and NSN could help fight off stiff competition from the Chinese players as well as Sweden’s Ericsson (ERICb.ST: Quote, Profile, Research, Stock Buzz).

Alcatel-Lucent has its own cash burn problems, however, and new Chief Executive Michel Combes has been tasked with implementing decisive job cuts. In 2012, the firm posted a 1.4 billion euro net loss.

“It’s unlikely that Alcatel will be interested,” said a banker who has worked with Alcatel, who asked not to be named because he was not authorized to comment.

Some financial analysts said Nokia, possibly in partnership with another investor such as private equity or Finland’s state investment fund Solidium, could take a minority stake in a sale or IPO and continue to benefit from NSN’s growth.

Morgan Stanley analyst Francois Meunier said it would be preferable for both Siemens and Nokia to make a “clean” exit, but said that if Nokia’s mobile phone business continues bleeding cash, a sale could make its financial results look even weaker.

(Additional reporting by Arno Schuetze and Maria Sheahan; Editing by Sonya Hepinstall)

At a meeting in Finnish Lapland this weekend, attendees
including Ireland’s Europe Minister Lucinda Creighton and host
Prime Minister Jyrki Katainen sounded confident that Cyprus
would secure a bailout deal to avoid financial collapse.

But they added the crisis was a reminder of the work needed
to make sure EU member states stand by shared fiscal targets.

Toomas Hendrik Ilves, president of Estonia which joined the
euro in 2011, said many saw bailouts as unfair.

“The result has been, over time, a decreasing willingness on
the part of governments to go along with bailing out because
their publics are not wiling to go along with it, and so their
parliaments are not going along with it,” he said.

“It’s going to get harder and harder to get things such as
EFSF and ESM (bailout funds) passed in parliaments if we don’t
see more responsibility taken by those who need assistance.”

In Finland, one of the few remaining countries in the euro
zone to be rated triple-A by all major credit rating agencies,
the anti-euro Finns Party has become a major opposition force,
with voters viewing bailouts of countries such as Greece and
Portugal as a reward for profligacy.

“When it’s a union of values, it means that we have to have
a strong sense of fairness,” Katainen said. “One of the reasons
we are in a crisis is that everybody did not follow the rules.”

The small Nordic economy endured a wave of bankruptcies and
years of austerity after a banking crisis in the early 1990s.
That experience, as well as the rise of the Finns Party in 2011
elections, has forced the broadly pro-Europe government to take
a tough stance on bailouts.

Finnish European affairs minister Alexander Stubb said the
Cyprus deal, expected to “bail in” top bank depositors, would
mark a step away from previous rescue packages by forcing
investors to share the burden, as countries such as Finland and
Germany have demanded.

“We’re going towards the system of a bail-in, and I think
that’s the message that’s being sent in this particular rescue
package,” he said of the Cyprus bailout.

Stubb said the worst of Europe’s debt crisis was over,
although he didn’t rule out some flare ups.

“We are going to get a few market turbulences still, it’s
quite clear, but it’s not as fundamental or systemic as the ones
we had when we had other countries on the brink,” he said.

Ireland’s Creighton said the experience in Ireland, which is
expected to exit its bailout programme this year after over two
years of fiscal reforms, proved that bitter austerity medicine
worked when applied with honesty.

(Editing by Mark Potter)

“In a normal market economy an investor always has a risk of
losing money,” he told reporters on the sidelines of a meeting
of European policymakers in Lapland, as markets awaited a Cyprus
deal to raise billions of euros and secure a European Union
bailout.

“That’s why I think it’s fair and right, and also part of a
normal market economy, that owners of a bank, investors, and
biggest depositors – who can be seen as investors – take their
own responsibility, in one way or another.”

Katainen criticised the earlier plan by Cyprus leaders to
tax small savers to protect bigger depositors, many of them
Russian.

“We cannot afford to lose confidence from depositors, and
that’s why Finland has never asked or demanded that small
depositors pay the price,” he said.

Finland is one of the few remaining countries in the euro
zone to be rated triple-A by all major credit rating agencies,
thanks to tight fiscal policies.

While the government is led by Katainen’s conservative and
pro-euro National Coalition party, the popularity of the
anti-euro opposition, the Finns Party, is seen forcing leaders
to take a tough stance on bailout terms.

The small Nordic economy endured a wave of bankruptcies and
years of austerity after its early 1990s banking crisis, and on
Thursday announced it would trim an additional 600 million euros
($777 million) from the state budget over the next few years to
bolster its finances.

Finland’s Minister for European Affairs Alexander Stubb,
also a conservative, said the government had no choice but to
take a hard line on Cyprus. Finland’s portion of the loan would
amount to 200-300 million euros.

“It’s not like we want to be mean,” he told Reuters. “We
have just done far-reaching budget cuts and tax increases in our
own budget, so how can we explain to our voters that we are
doing a readjustment of 600 million and at the same time giving
a loan to Cyprus for 2-300 million which is not conditional? We
just can’t do that.”

He added he was confident that Cyprus will find a bailout
deal before a Monday deadline set by the European Central Bank
when it will sever cash to Cypriot banks if no bailout programme
is agreed.

“Why am I optimistic? Because there are no other options,”
he said. “They’ll find a solution, if not today then over the
weekend.”

(Editing by Ron Askew; editing by Ron Askew)