SKF, a manufacturing bellwether with its bearings found in products ranging from skateboards to wind turbines, forecast roughly unchanged demand in the second quarter versus the first for the group, including European and North American businesses.

"There are some positive signs in Europe, but not robust enough to merit a more positive outlook in my mind," SKF CEO Alrik Danielson said. "There is so much uncertainty still in what is going to happen in the next quarter."

Some analysts had looked for more optimism from SKF on demand in Europe, its biggest market, where a depreciating euro, massive stimulus from the European Central Bank and lower oil prices have begun to revive the region's economy.

SKF shares fell 7.4 percent at 0947 GMT, making it the top faller in the STOXX Europe 600 Industrial Goods & Services Index <.SXNP>.

The company has been one of the strongest performing European industrial stocks this year with a 37 percent gain. This has been partly due to a weaker Swedish crown against the dollar and upbeat expectations about Danielson, who took the helm at the group in January.

He has already made his mark, cutting 1,500 staff and merging SKF's two industrial businesses. He has also embarked on a review of SKF's automotive business, a big obstacle in terms of closing in on a 15 percent margin target.

SKF said it would say more on the review in its second quarter report in July.

"It is a business that is close to our heart. The assessment that we are doing today is of course that we are looking at it inside SKF going forward," Danielson said.

There have been expectations SKF could opt for an outright sale of the automotive business, whose profitability trails that of the rest of the group. The prospect of a sale has helped to buoy SKF shares.

"The comments from the CEO that SKF does see a future for automotive within the group seems to be a disappointment for some," Lars Soderfjell, Equity Strategist at Alandsbanken, said.

SKF's adjusted first-quarter operating profit rose to 2.38 billion crowns (£184.02 million) from 1.91 billion a year ago, on the back of strong currency tailwinds. This roughly matched a mean forecast of 2.39 billion in a Reuters poll of analysts.

(Additional reporting by Olof Swahnberg. Editing by Jane Merriman)

By Johannes Hellstrom and Niklas Pollard