Updated from 8:34 a.m. ET

Shares of

Nokia

(NOK) - Get Report

surged this morning after the mobile phone giant announced a $230 million network expansion deal with a Chinese communications company.

Nokia shares recently rose $1.35, or 6.3%, to $22.69, up from Friday's closing price of $21.34 on the

New York Stock Exchange

.

The Finnish mobile phone company said this morning it signed a deal with

Fujian Mobile Communications

to expand its GSM network by more than 3 million subscribers. Nokia will also provide a range of network infrastructure as well as professional services, the company said.

Nevertheless,

Merrill Lynch

downgraded its intermediate-term rating on Nokia to accumulate from buy, citing likely intense pricing pressure and concern that the mobile telecom sector will not meet its internal 30% to 35% first-half revenue target due to a soft handset market. (

TheStreet.com

wrote a

separate story on the latest problems battering the mobile phone industry.)

Merrill, which maintained its long-term buy rating on the company, also slashed its earnings-per-share forecast for Nokia by 10% to 0.79 euros for 2001 and by 18% for 2002.

The investment firm also acted on Nokia's rivals, cutting its earnings forecast for

Ericsson

(ERICY)

by 16% for this year and by 22% for 2002, while maintaining its accumulate rating. Merrill also reduced

Alcatel's

(ALA)

earnings-per-share forecast by 12% for 2001 and 20% for 2002, and lowered its projection on

Marconi

(MONI)

by 14% for 2001 and 8% for 2002.

Shares of Ericsson recently gained 2.3% to $8.44. Alacatel fell 1.2% to $40.18, while Marconi rose 3% to $15.