Outokumpu, 26 percent owned by the Finnish state, said it had picked Roeland Baan, an executive from aluminium products company Aleris, to start as the new CEO at the beginning of 2016. He will replace Mika Seitovirta, who has led the company since 2011.

Seitovirta has struggled to turn the business around following an unsuccessful acquisition of Thyssenkrupp's Inoxum unit in 2012. Outokumpu has not reported an annual operating profit since 2007.

Shares in the company jumped more than six percent after the announcement and closed 2.6 percent higher. They have fallen about 90 percent since Seitovirta took over.

"The market reaction shows this is good news for Outokumpu ... Its competitors have been able to perform decently in a difficult market while Outokumpu has fallen behind," said Antti Viljakainen, analyst at Inderes Equity Research.

The sacking also became a political issue as the opposition leader Antti Rinne from the Social Democrats criticised a 1.5 million euro ($1.66 million) golden handshake given for the outgoing CEO amid austerity in the recession-hit country.

"This is totally inordinate... (Prime minister Juha) Sipila has demanded ordinary people accept wage cuts, so I'm sure he could do something for this Outokumpu compensation," Rinne told Finnish broadcaster MTV.

The Finnish government's investment arm Solidium declined to comment on Seitovirta's sacking, saying the move was independently handled by the company's board, which is led by former Nokia boss Jorma Ollila.

The 2012 Inoxum acquisition was supposed to offer Outokumpu a route to recovery, but the deal had to be partly reversed after the EU demanded an important mill in Italy be left out of it.

Since then, the company has been hit by a string of internal and external troubles. Last month, the company warned of a deeper quarterly loss than expected, saying a drop in nickel prices was making distributors hold back orders while production problems were also harming the business.

(Reporting by Jussi Rosendahl and Anna Ercanbrack, editing by Ralph Boulton)

Stocks treated in this article : ThyssenKrupp AG, Outokumpu Oyj