Ahead of the Bell: Capacity cuts lift paper makers

Sweeping capacity reductions announced Wednesday by two of the world's largest paper makers helped lift the global sector in premarket trading.

UPM-Kymmene Corp., the world-leading producer of magazine paper, said it will eliminate 1,600 jobs in 2009 and 2010, and cut production. Another Finland-based company, Stora Enso Oyj, announced mill closures and 1,700 layoffs, including 600 workers in Germany and 400 in Russia.

Both companies gave profit warnings in June and said they would announce new cost-cutting measures on top of earlier moves that cut hundreds of jobs, shut paper and pulp mills and reduced production.

In European trading, the companies' shares jumped on the announcements.

Meanwhile, in U.S. premarket trading, AbitibiBowater Inc. rose 25 cents, or 5.1 percent, to $5.17, International Paper Co. gained 89 cents, or 3.1 percent, to $29.43 and Caraustar Industries Inc. climbed 3 cents to $1.96.