* Sees moderate growth in main markets 2017
* Expects cost efficiency boost of 1.6 bln SEK
* Shares up 2.9 pct, top gainer in sector (Adds analysts, updates shares)
STOCKHOLM, Dec 9 (Reuters) - Electrolux expects slower growth on both sides of the North Atlantic next year but the home appliance maker said its cost efficiency drive would help boost earnings.
The Swedish maker of Electrolux, Frigidaire, AEG and a string of other household appliance brands, forecast market demand would grow 1 percent next year in Europe and 2-3 percent in North America.
"Market demand in Electrolux's largest markets, Europe and North America, is expected to grow moderately," it said in a statement providing its first outlook for 2017.
Electrolux, a rival of Whirlpool of the U.S. and Asian firms such as LG Electronics and Haier Group , said market demand had been positive in Europe this year though it had seen recent signs of slower activity in some markets, including Britain.
Facing modest market growth next year, Electrolux said it expected improved cost efficiency to boost earnings by 1.6 billion crowns ($175 million) next year, excluding the impact of raw materials and currency swings.
Shares in the company were up 2.9 percent by 0837 GMT, the biggest gainer in the STOXX Europe 600 Personal & Household Goods Index, with analysts attributing the gain to the outlook for cost savings.
"All in all, most of the expectations are in-line to slightly weaker than we had expected. However, the net cost efficiency of SEK 1.6 billion is substantially higher than expected," Pareto Securities said in a note.
In October, Electrolux stuck to a forecast for 2-4 percent growth in Europe this year, but said signs of weakness in markets such as Britain, which voted in June to leave the European Union, meant growth was likely to come in at the lower end of that range.
It also forecast market demand for appliances in North America to grow by 3-4 percent in 2016.
The company said on Friday it expected market demand in Argentina and Brazil combined, which represent the majority of its business in Latin America, to fall by about 5 percent in 2017.
It also said raw material costs were expected to increase by approximately 900 million crowns in 2017.
$1 = 9.1430 Swedish crowns Reporting by Johannes Hellstrom; editing by Keith Weir and Jason Neely