* Adjusted operating earnings fall to 7.7bn crowns from 9.1bn
* Electricity generation volumes fall
* To cut 1,000 jobs, target 2.5bn crown savings 

Reuters/Stockholm

Hurt by fallen power prices, Vattenfall will cut 1,000 jobs and shut its two oldest nuclear reactors earlier than planned, the Swedish state-owned utility said on Tuesday.

Its first-quarter earnings on Tuesday showed a fall in adjusted operating earnings to 7.7 billion Swedish crowns ($892 million) from 9.1 billion a year earlier.

Vattenfall, which operates seven reactors, said it would shut the 881-megawatt Ringhals-1 and 865 MW Ringhals-2 nuclear reactors between 2018 and 2020 instead of, as previously announced, around 2025.

"Unfortunately, we see market conditions with continued low electricity prices in the coming years. At the same time, we are facing increasing production costs," said Torbjorn Wahlborg, head of generation at Vattenfall.

The book value of Ringhals 1 and 2 on Vattenfall's group consolidated balance sheet amounted to 15.1 billion crowns, of which Vattenfall holds 70.4 percent.

Germany's E.ON, which holds the remainder, was not available for immediate comment. Closure of the reactors would require agreement between the two.

Vattenfall said its results were hurt by lower production and a continued fall in power prices.

"The protection we have in the form of forward contracts entered into at higher price levels is gradually decreasing," Vattenfall's Chief Executive Magnus Hall said. "The current low wholesale prices are having a gradually bigger impact on Vattenfall's earnings."

Electricity generation volumes fell to 46.4 terawatt-hours (TWh) in the quarter from 50.1 TWh.

Vattenfall said it would cut about 1,000 jobs across the group, which employs more than 30,000, to help generate savings of 2.5 billion crowns in 2015-2016.

The company also said the process of divesting its German brown coal, or lignite, operations continued.

Vattenfall faces potential delays in the sale of its brown coal assets in Germany due to buyer concerns about a proposed coal levy, people familiar with the matter told Reuters last week.

The lignite mines and power plants are valued at up to 3.5 billion euros, but could fetch far less depending on the political framework for lignite.