VOLVO surged the most in almost eight years in Stockholm after saying it would deepen costs cuts and pay a dividend.

The Swedish truck maker aims to pay a dividend of 2 kronor for last year, down from 5.5 kronor a year earlier, Volvo said yesterday, as it announced fourth-quarter earnings. Volvo lost 1.36 billion kronor (US$165 million) in the period, and said it would be adapting to lower demand.

Volvo's decision to maintain a payout contrasts with Swedish companies including Electrolux and SEB, who abolished their dividends to preserve cash. Volvo's fourth-quarter truck orders dropped 82 percent, as cancellations in Europe exceeded bookings. The company is cutting 15,900 permanent and short-term positions, Bloomberg News said.

'Volvo is trying to adjust its manufacturing production to the lower demand on truck and construction equipment,' said Jose Asumendi, an analyst at Royal Bank of Scotland in London. 'We're going to have two or three difficult quarters but we're getting to the point where earnings will trough.'

Volvo gained as much as 6.6 kronor to 41.50 kronor in Stockholm yesterday, the most since March 20, 2001.

Last year, the shares lost 60 percent in value, their worst annual return since at least 1990.

Volvo's loss compares with a profit of 4.06 billion in the same period in 2008.