Lower worldwide demand for paper products made two Finish paper and forestry groups announce major personnel cut, citing the need to cut costs.

Stora Enso, one of the world's largest pulp and paper concerns, said it planned to cut 1,700 jobs from its global workforce of 36,000 employees including 600 employees in Germany, 550 in Finland, 400 in Russia, and 150 in other countries.

The company estimated that by 2010 the measures would improve its operating profit by 140 million euros (197 million dollars).

Stora Enso chief executive Jouko Karvinen said the was move aimed at offsetting "anticipated increases in duties on roundwood imported from Russia."

Karvinen also said the group would, as of 2009, "be able to operate effectively without Russian roundwood, if needed."

Rival UPM-Kymmene, which has operations in 14 countries and some 26,000 employees, said it planned to close its "least competitive paper and pulp capacity in Finland."

Along with other cost-cutting measures the move was expected to affect some 1,600 employees between 2009 and 2010, the group said, estimating savings of up to 70 million euros.

"Demand growth for paper in traditional markets has slowed down. Overcapacity still exists in Europe and slowing economic growth imposes further challenges," UPM chief executive Jussi Pesonen said in a statement.

Share prices for both groups increased some 7 per cent on the news, at the Helsinki bourse.