SEOUL (Reuters) - South Korean steelmaker POSCO (>> POSCO) posted a steeper-than-expected 47 percent year-on-year fall in its third-quarter operating profit on Thursday, weighed down by declining sales and a prolonged slump in steel prices.

The world's fifth largest steelmaker reported an operating profit of 443 billion won (258.8 million pounds), below an average forecast of 498 billion won according to Thomson Reuters I/B/E/S.

The operating profit was also lower than the 838 billion won of the same year-ago period.

Sales in the July-to-September quarter fell 17 percent to 7.4 trillion won from a year ago.

Shares in POSCO, in which Warren Buffett's Berkshire Hathaway (>> Berkshire Hathaway Inc.) owns some 5 percent, ended up 0.5 percent prior to the results, in line with 0.5 percent gain in the broader market <.KS11>.

Shares in POSCO lost 8.3 percent so far this year, lagging the market's 2 percent rise.

(Reporting by Hyunjoo Jin; Editing by Miral Fahmy)