Work has begun on the first Nokia Oyj smartphones based on Microsoft Corp software following the partnership announced by the companies last month, Nokia Chief Executive Stephen Elop told Reuters.

Elop was recruited last year to rescue Nokia from increasing irrelevance at the high end of the market and is under huge pressure to produce results from the partnership.

Elop, who left a Microsoft executive post to join Nokia last September, also said he could see no good reason for the speculation that Microsoft might try to buy Nokia.

I'm not aware of a strategic interest that Microsoft would have in the rest of the business, Elop said.

To the extent that a partnership has been formed around what they're really interested in, then what would an acquisition bring other than a good year of anti-trust investigation, huge turmoil, delays?

Nokia shares extended gains to trade as much as 2.9 percent higher. By 1459 GMT, they were up 2.2 percent at 5.86 euros, against a European technology index up 0.7 percent, having been up 1.2 percent before the Reuters interview was published.

Nokia shares have fallen almost 30 percent since the agreement with Microsoft was announced and remain not far from their more than 10-year low of 5.415 euros set earlier this week.

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Almost half of Nokia's handset revenue comes from more basic mobile phones, which are popular in emerging markets. The company has struggled to establish its brand in the United States, especially since Apple Inc launched its iPhone.

Nokia also considered partnering with Google Inc, but decided it would be too difficult to differentiate its smartphones from a multitude of other Android devices made by the likes of Samsung and HTC.

Nokia's chairman has said Windows-based Nokia phones will be on sale from 2012, though Elop has said he feels under pressure and would prefer to deliver one by the end of this year.

We're right now, today, having people work on the first Windows Phone devices from Nokia. That work is already under way. If this was an acquisition scenario, that wouldn't be possible, Elop said.

The agreement between Nokia and Microsoft still has to be finalized, something that Elop has said he expects to happen in the next couple of months.

Elop said he had no current plans to change Nokia's top management, after only one senior executive was dropped in his line-up announced last month. He dismissed as nonsense a German magazine report that a wider cull was likely.

Now what happens is accountability. If someone's not succeeding, they need to be helped or they need to be moved along. In my context, that will absolutely be the case, he said.

So there's a team in place. It's now a new team of my new leadership, newly minted in terms of their new roles. Now they have to perform.

(Editing by Will Waterman and David Holmes)

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