UPDATE 3-Canaccord Capital posts surprise quarterly profit

* Q4 EPS C$0.07, cost-cutting credited

* Revenue falls 25.4 percent to C$107 million

* Dividend remains suspended to preserve capital

* Shares surge 8.4 pct to C$7.86 (Adds analyst, executive comments; updates share price)

By Andrea Hopkins

TORONTO, May 20 (Reuters) - Canaccord Capital Inc (CCI.TO: Quote, Profile, Research) reported a surprise quarterly profit on Wednesday as heavy cost cuts offset a drop in revenue, sending its shares up more than 8 percent.

The Canadian investment dealer said efforts to reduce spending by cutting compensation and general operating expenses had begun to pay off, ending two consecutive quarters of losses at the Vancouver-based company.

Shares of Canaccord shot up 8.4 percent to C$7.86 in Toronto as investors applauded the belt-tightening. Analysts said the cost-cutting discipline could help Canaccord as it adjusts to the grim economy and slower business.

"Though we continue to have a cautious view on the revenue outlook, we believe the signs of progress in expense management for Canaccord this quarter will be viewed favorably by the market," Macquarie analyst Sumit Malhotra said in a research note.