OMAHA, Neb. (AP) via NewsEdge Corporation -

Productivity improvements and revenue growth helped Union Pacific Corp. increase third quarter net income 4 percent to $256 million, or $1 per share, despite increased fuel prices, the company said Thursday.

The railroad's results edged the 98 cents per share that was expected by analysts surveyed by First Call/Thomson Financial.

Net income in last year's third quarter was $245 million, or 96 cents a share.

Union Pacific shares closed Thursday up $1.25, or 3 percent, at $40.63, on the New York Stock Exchange. Their 52 week high was $56.50 a share on Oct. 29, 1999.

Union Pacific is the nation's largest railroad.

Analyst Jill Evans with J.P. Morgan said railroad stocks are trading at historically low levels, partly because of increased investor interest in high technology companies and because of concerns over increased fuel prices.

Large improvements in Union Pacific's stock price may not be seen until those trends reverse themselves, she said.

``The company is doing what it can,'' Evans said. ``It is improving earnings despite what could be a slowing economy and incredibly high fuel costs.''

Last year's third quarter included $27 million of income from discontinued operations, Union Pacific said. With that amount discounted, net income for the quarter ended Sept. 30 increased by 17 percent.

Revenue growth, coupled with productivity improvements, helped bring the railroad's operating ratio to 80.2 percent, a quarterly best since the 1996 merger with Southern Pacific.

The improvement was accomplished despite a 64 percent increase in fuel prices compared with last year's third quarter, the company said. Union Pacific increased its hauling rates about 3 percent earlier this month to help offset rising fuel prices.

Union Pacific poured millions of dollars into implementing its merger with Southern Pacific as service problems crippled the railroad in 1997 and 1998. The railroad believes it has begun to experience the benefits of a merger that brought it to a total of 36,000 miles of track in 23 states from the Midwest to the West and Gulf coasts.

For the first nine months of this year, Union Pacific had net income of $685 million, a 21 percent improvement over the $568 million in the same period last year.

Union Pacific's trucking company, Overnite Transportation, is embroiled in a Teamsters strike, but reported third quarter operating income of $20 million, more than double the $8 million in last year's third quarter.