STEELMAKER Corus yesterday reported a 63 per cent rise in earnings after improved trading conditions and higher steel prices offset an increase in operating costs in the market.

The Anglo-Dutch steelmaker - currently a takeover target for India's Tata Steel and Brazil's CSN - announced its profits rose to £171m in the three months to September 30, from £129m in the second quarter of the year.

The group's third-quarter results are more than double the £75m profit from the same period last year.

Strong European demand has seen steel selling prices rise by eight per cent, countering the impact of a two per cent rise in raw material operating costs.

Chief executive Phillipe Varin said the performance reflected better trading conditions - but predicted the fourth quarter would be more challenging with seasonal production shut-downs.

Corus, which employs more than 3,000 people in the North-East and has an annual turnover of £9.3bn, is currently the subject of a multi-billion pound takeover bid, with Tata Steel and steelmaker Companhia Siderurgica Nacional (CSN) both in the running.

Tata's £4.3bn offer, which equates to 455p a share, was agreed by Corus last month, but CSN - which tried to merge with Corus in 2002 - later announced it would top Tata with a 475p offer.

Shareholders are due to vote on Tata's bid on December 20, after the date of Corus's extraordinary general meeting was pushed back to allow CSN time to complete necessary due diligence and decide whether it wants to make a rival offer.

As a result of the speculation and favourable trading conditions, the Corus share price has risen from 200p in June last year to close yesterday at 500p.

Anthony Platts, assistant director at Tees Valley investment manager Wise Speke, said the results were encouraging for the industry.

"Turnover is up quite significantly, but at the same time they have been able to contain costs while the price has held up reasonably well," he said.

"The results, on this basis, show there is still a healthy future for steel."

Mr Varin said the quarter's profits were also due to benefits from the company's Restoring Success programme, a three-year initiative to make Corus more competitive, which is on course to meet its target of £635m earnings benefits by the end of the year.

"As expected, our financial performance has improved in the third quarter," he said.

"The commercial environment in the fourth quarter remains stable, however our profitability in this period will reflect seasonal production shutdowns."