The world's top cellphone maker Nokia reported a surprise loss for the July-September quarter, hit by a major writedown at its networks unit, but said demand for handsets had improved.

Nokia booked a 908-million euros ($1.35 billion) hit from its networks unit, citing challenging market conditions.

The company said on Thursday its earnings per share, minus one-offs, for the three months fell to 0.17 euros from 0.33 euros in the same period of 2008. The result compared with an average forecast of 0.14 euros in a Reuters poll of 37 analysts.

But including the charge at the networks unit Nokia reported a loss per share of 0.15 euros, missing all forecasts.

Shares in Nokia were down 4 percent at 9.90 euros by 1010 GMT.