UPDATE 2-ArcelorMittal sees gradual pick-up after Q3 profit

* Returns to net profit after 3 consecutive quarterly losses

* Sees Q4 EBITDA of $2.0-$2.4 billion

* Sees gradual improvement in challenging environment

BRUSSELS, Oct 28 - ArcelorMittal, the world's largest steelmaker, returned to profit in the third quarter and forecast a modest improvement in the final three months of the year.

The company said on Wednesday that it turned a net profit of $903 million, albeit due to an income tax benefit, after three straight loss-making quarters in which it suffered a near-collapse in the construction, machinery and car markets.

Chief Executive Lakshmi Mittal said the company had seen the first signs of recovery in July-September, with production set to rise to about 70 percent of capacity in the fourth quarter.

"We should continue to see further gradual improvement through 2010, although the operating environment remains challenging," he said in a statement.

The company's much-watched core profit, earnings before interest, tax, depreciation and amortisation, totalled $1.59 billion in the third quarter, down 81 percent year-on-year but up 30 percent from the second quarter.

The company had previously given a forecast range of $1.4 billion to $1.8 billion. The average figure given in a Reuters poll of 12 analysts was $1.67 billion.

For the fourth quarter ArcelorMittal said it expected EBITDA of $2 billion to $2.4 billion.

By then output will have risen and lower raw materials prices should have a stronger impact.

Analysts had tended to be looking for guidance of around $2.5 billion, with a range from about $2 billion to $3 billion.

"You have seen steel prices coming down. I would have said below $2 billion would have been weak. It's not bullish, but it's consistent with what you should realistically expect," said Petercam analyst Alexandre Weinberg.

Dirk Nettling, an analyst at Commerzbank in Frankfurt, described the guidance as "at the lower end, but within the range".

ArcelorMittal, with output some three times greater than nearest rival Nippon Steel and nearly 8 percent of the global market, has said it does not expect markets to normalise in Europe and the United States in 2010.

However, Chinese domestic demand is seen growing by more than 15 percent.

The World Steel Association forecast this month that global steel consumption would rebound by 9.2 percent in 2010 after a drop this year of 8.6 percent, a narrower decline than expected due to Chinese growth.

Japan's Nippon Steel reports first-half results on Thursday. South Korea's POSCO, the global number four, this month signalled a brighter outlook for the sector on improved global demand.