ZTE Corp, China's No.2 network equipment maker, plans to launch smartphones based on Microsoft Corp's Mango operating system in Europe in the third quarter of this year, executives said.

We are already working on a smartphone based on Mango and it will be launched in Europe, Jeffrey Fan, a vice-president from ZTE's terminal devices unit, told Reuters during a company event on Wednesday.

Microsoft launched an update of its Windows phone software code-named Mango on Tuesday, hoping a host of new features will help it close the gap on smartphone leaders Google Inc and Apple Inc.

ZTE and larger Chinese rival Huawei Technologies Co Ltd, traditionally in the network equipment business, have been aggressively entering the fast-growing mobile devices sector by rolling out smartphones and tablet PCs.

ZTE expects to ship more than 80 million handsets this year, up by a third from last year's 60 million units, an executive told Reuters earlier this year.

Shipments of smartphones, which run Google Inc's Android operating system, would rise to 12 million units from 3 million last year, ZTE said.

In the fourth quarter of last year, ZTE became the fourth-largest handset maker by unit shipments globally, ranking behind NokiaSamsung Electronics Co Ltd and LG Electronics Inc, market research group IDC said.

(Reporting by Lee Chyen Yee and Huang Yuntao; Editing by Chris Lewis)

China Launch Microsoft Smartphone