Unexpected loss for India's Tata Steel

Tata Steel Tata Steel is the world's tenth largest steelmaker and the biggest in India

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Tata Steel, the largest producer in India, unexpectedly reported a loss for the last three months of 2011, hit by weak demand.

The company saw a net loss of 6.03bn rupees ($122m; £77m) in the third quarter, Tata Steel said in a statement.

That compares with a net profit of 10bn rupees a year earlier.

Higher prices for raw materials as well as falling demand and prices in Europe contributed to the decline, Tata said.

Analysts were expecting a 3.4bn rupee net profit, according to Reuters news agency.

The company operates two thirds of its capacity in Europe, where the debt crisis is hitting demand.

The head of Tata's European operations said he did not expect demand to pick up this year.

"We are accelerating cash conservation in expectation of muted but stable demand in our core markets in 2012," he said in a statement.

Analysts said Tata Steel was being squeezed from both sides.

"There hasn't been a demand uptick that was expected, so prices have come down," said Ravindra Deshpande from Elara Securities in Mumbai.

"At the same time, none of their production costs are lower, so margins are under pressure."

Mr Deshpande added that he did not expect much better results in the next few quarters.

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