UPDATE 2-Steelmaker Nucor sees narrower loss, sector soars

* Sees narrower Q2 loss than Wall Street expects

* Steel sector stocks up in early trading

* Analysts anticipate higher steel prices (Updates with steel sector stocks up, analyst comments)

NEW YORK, June 16 - Steelmaker Nucor Corp said on Tuesday it expects a narrower second-quarter loss because orders appear to be picking up, sending its shares up.

The announcement, along with reports of steel price increases and news of a rebound in May housing starts that signaled possible stabilizing of the economy, sent the rest of the steel sector higher too.

In morning trading on the New York Stock Exchange, Nucor stock rose about 4.4 percent to $47.76. AK Steel rose 6.2 percent to $19.47 and U.S. Steel was up 3.6 percent at $38.45. On Nasdaq, Steel Dynamics was 5.4 percent higher at $16.06. The Dow Jones steel index .DJUSST> was up 4.4 percent.

"Order entry has improved in recent weeks," Nucor Chairman, Chief Executive Officer and President Dan DiMicco said in a statement. "Nevertheless, the economic outlook remains very uncertain in light of the continuing severe structural challenges facing the U.S. and global economies."

The company said it will report a loss in the range of 55 cents to 65 cents per share. Analysts on average currently expect a loss of 70 cents per share.

In April, Nucor had said it was expecting a loss in the second quarter greater than the first-quarter loss of 60 cents. Nucor earned $1.94 per share in the second quarter of 2008, but, like most steelmakers, has been hit by the economic downturn which has dried up demand since late last year.

In a research note, analyst Anthony Rizzuto of Dahlman Rose & Co said steel mill utilization has increased for seven consecutive weeks.

"We believe that destocking has largely run its course, and that service centers (steel buyers) are beginning to increase their order activity.

"While some restocking may occur, we do not anticipate that this will be meaningful, but we do anticipate that order entry at the steel mills will begin to match end-user demand," he wrote.

Analyst Michelle Applebaum of Steel Market Intelligence noted Nucor's new estimate but said she would stick with her estimate of a loss of 50 cents "given the company's tendency towards conservatism."

Applebaum also said ArcelorMittal, the world's largest steelmaker, just announced "a meaningful price hike...further evidence that the sudden tightness we've noticed in recent weeks is spreading as steel buyers regain confidence."