Sweden's SKF (SKFb.ST) said on Thursday its automotive business had fared better than expected so far in the fourth quarter, but warned the phasing out of incentive schemes in Europe could dent sales going into 2010.

Chief Executive Tom Johnstone said in a Reuters interview the impact of phasing out the incentive schemes, originally seen already in the fourth quarter, now looked likely to have been postponed until the beginning of next year.

"I think it is clear that that has probably moved more into the first quarter," he said, adding that the automotive unit had performed better than expected so far in the fourth quarter.

"October and November is holding up, so we really haven't seen any effect in the European market of the ending of the incentive programs yet. Whether it will still hit us right at the end of December, I don't know yet."

SKF, seen as a bellwether for the manufacturing sector with its bearings used in products ranging from dishwashers to passenger jets, said in October it saw slightly higher demand in the fourth quarter compared to the third on the back of an upturn in Asia and Latin America. "I can see so far, two months in to the quarter, that it's broadly in line with what we expected," Johnstone said.

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