Cameco outlook sours amid doubts on

nuclear's future

* Q4 sales volumes highest since 2005

* Company sees 2012 revenue flat to down 5 percent

* Eyes lower production in 2012

* Shares down 1 pct at C$23.12

TORONTO, Feb 10 (Reuters) - Uranium producer Cameco forecast lower sales and highlighted doubts about the takeup of nuclear power in its stronger than expected quarterly results, and its shares edged lower on Friday, in line with the overall market.

Shares of Canada's top uranium producer rose at market open on the Toronto Stock Exchange, but were down 1 percent at C$23.12 by mid-morning after the company warned 2012 revenue could fall by as much as 5 percent on lower sales volumes in its fuel services business and lower realized uranium prices.

The overall market was down just over 1 percent.

On the positive side, the Saskatoon, Saskatchewan-based uranium producer reported a 29 percent increase in quarterly earnings and a 45 percent boost in revenues, late on Thursday.

Cameco's per share adjusted profit of 63 Canadian cents handily beat analysts average estimate of 46 Canadian cents, according to Thomson Reuters I/B/E/S.

Quarterly sales volumes hit their highest level since the fourth quarter of 2005, with full-year sales heavily weighed to the final quarter.

But Cameco, the world's No.1 publicly-listed uranium producer, also lowered its 2012 uranium production outlook by 3 percent to 21.7 million pounds and said delays and cancellations after last year's Fukushima nuclear disaster could hit prices.

Germany, which represents about 5 percent of the global market for uranium, plans to phase out its reactors by 2022.

Japan shut down most of its reactors for testing after the March 2011 earthquake and tsunami that crippled the Fukushima Daiichi power plant, and is expected to take its remaining three reactors offline for maintenance in the next few months.

"It remains unclear what level of nuclear power Japan itself - which represents 12 percent of global nuclear generating capacity - will depend on in the future," Cameco said.

In the long-term, Cameco sees uranium demand gaining strength as construction of new reactors in China outweighs the decommissioning of plants in Japan and Germany.

China has some 27 reactors under construction and plans to boost its nuclear output to 80 gigawatts from 11 gigawatts within a decade. Canada reached a trade deal with China on uranium exports on Thursday.

Analysts noted that Cameco - with projects in Canada, the United States, Australia and Kazakhstan - remains a top pick in the uranium industry.

"While the near-term uranium market outlook remains uncertain, we maintain our positive longer-term view that prices must rise to encourage new supply," RBC Capital Markets analyst H. Fraser Phillips wrote in a note to clients. "Cameco is well placed to take advantage of increasing demand and prices."

Cameco plans to boost uranium production to 40 million pounds a year by 2018.