UPDATE 3-Brazil's CSN Q3 profit soars 28-fold, shares rally

* Profit jumps 28-fold yr-on-yr on nonrecurring gains

* CSN to group iron ore assets into one company

* Profits beat analysts' estimate

* Shares rally 3 percent in Sao Paulo (Recasts to add plans for iron ore unit, remarks on demand)

By Guillermo Parra-Bernal and Alberto Alerigi Jr.

SAO PAULO, Nov 4 (Reuters) - CSN (CSNA3.SA: Quote, Profile, Research)(SID.N: Quote, Profile, Research), Brazil's third-largest steelmaker, said on Wednesday net profit rose about 28-fold in the third quarter helped by a one-off gain from the sale of a stake in iron ore unit Namisa and a stronger currency that trimmed debt-servicing costs.

The company, formally known as Companhia Siderurgica Nacional, said net income climbed to 1.15 billion reais ($659 million) from a profit of 39.7 million reais in the same period of 2008. The result beat the 543 million reais average net income estimate of six analysts polled by Reuters.

CSN shares rallied 3 percent to 60.35 reais in Sao Paulo on Wednesday, hitting a one-week high.

Lower production costs and decreasing taxes also helped boost profits and margins from the prior quarter. A recovery in demand for steel is expected .