Russia's OAO Gazprom (GAZP.RS), the world's largest producer of natural gas, Thursday posted an eightfold increase in fourth-quarter net profit as production and demand recovered, prompting a rise in the company's share price.

Net profit for the three months ending Dec. 31 rose to RUB308.7 billion rubles ($10.5 billion), as calculated by Dow Jones Newswires from annual figures, compared with RUB37.52 billion during the same period a year earlier. That figure was above the RUB214.61 billion average of 11 analysts polled by Dow Jones Newswires.

"Our immediate reaction is that the results are positive," said Viktor Mishnyakov, analyst at UralSib brokerage in Moscow .

At 0902 GMT, Gazprom's ADRs were trading up 2.3% at $23.68 each in London . The company's shares almost doubled last year amid a strong recovery in Russian equities.

Revenue in the period, however, slipped to RUB580.5 billion from RUB946.0 billion a year earlier, as gas sales last year to Europe and countries from the former Soviet Union fell.

Analysts had expected fourth-quarter sales of RUB937.4 billion. The lower revenue was due to a difference in accounting practice, which excludes trading of gas from the posted sales figure, said UralSib's Mishnyakov.

Gazprom supplies around a quarter of Europe 's gas needs, though its market share dropped last year due to the inflow of alternative energy sources.

Operating profit totaled RUB856.9 billion in 2009, down from RUB1.260 trillion a year earlier.

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