UPDATE 1-First quarter profit flat for Finland's UPM

(Adds CEO comments, details, shares)

HELSINKI, April 27 (Reuters) - Finnish pulp and paper producer UPM said on Tuesday that profit was flat for January-March as a sharp rise in pulp prices was offset by continued weakness in the paper market.

“Pulp demand has continued to be good and pulp prices have increased rapidly,” UPM’s Chief Executive Jussi Pesonen said in a statement.

Underlying operating profit for January-March totalled 279 million euros ($336.7 million), unchanged year-on-year and in line with a mid-April pre-release.

UPM’s biorefining unit - its biggest profit creator and largest sales creator after its paper unit - reported a jump in underlying operating profit to 90 million euros from 37 million a year earlier as sales grew 19% to 606 million euros.

“Demand for pulp, timber and biofuels was good and pulp prices increased faster than expected,” Pesonen said.

The results echoed a similar development at UPM’s domestic peer Stora Enso, which last week reported a bigger-than-expected jump in first quarter operating profit but said its paper unit fell to a loss as its sales dropped 28% from last year.

UPM’s paper unit saw first-quarter revenues tumble 16% to 815 million euros as demand and prices dropped from a year earlier, and the unit’s operating profit fell to 20 million euros from 76 million a year before.

Shares in UPM were down 0.9%, in line with a weaker Helsinki bourse. ($1 = 0.8286 euros) (Reporting by Tarmo Virki and Essi Lehto; Editing by Susan Fenton)