Will mobile giant Nokia offer hope that the slumping handset market has bottomed out or will its highly anticipated first-quarter numbers, expected on Thursday, point to a worsening decline?

With 40 percent of the handset market and the broadest geographical presence, Nokia is the mobile market’s pre-eminent bellwether and its performance and outlook carries by far the most weight.

Analyst Matthew Thornton of Avian Securities believes that Nokia’s first-quarter 2009 numbers will give some early indications that the slump is ending.

“The thing we are looking for is Nokia’s commentary around end demand. We are looking for detail on how end demand is tracking and Nokia gives a very good regional flavor around that,” he said.

Mr. Thornton expects to see strong consumer demand for handsets in China and India, which will offset weakness in Eastern Europe, Russia, and Africa.

The bounce in China will be due mainly to government stimulus efforts, the recent restructuring of the major Chinese carriers, and attractive, revamped, consumer packages.

“Whether this sustains beyond the first quarter will be something we will watch,” Mr. Thornton said.

In January, Nokia reported a whopping 69 percent tumble in fourth-quarter profit due mainly to dwindling sales in North America, China, and Asia-Pacific. (Nokia Takes Jarring Profit Fall)

Profit and sales missed analysts’ estimates, sending the Finnish phone maker’s shares  8.9 percent lower in Helsinki trading.

Last month Nokia said it would slash 1,700 jobs as part of a plan to match its support costs to decreasing handset sales. (Nokia to Shed 1,700 Jobs)

The market is being bombarded on a number of fronts. Unexpectedly poor consumer demand for handsets in the fourth quarter of 2008 has created a bulge in inventory throughout the industry.

Distributors, retailers, and carriers practically stopped ordering handsets and handset makers in turn have cut back on component orders.

The market has also been affected by volatility in various currencies and the credit crunch. (4 Billion Served as Nokia Shrinks)

And while the inventory problem seems to be running its course and the credit crisis may be loosening up a bit, the bottom line is consumer demand. And because of saturation in the consumer market the discretionary nature of that demand is worrisome to In-Stat analyst Allen Nogee.

“A high percentage of the demand is replacement phones rather than new subscribers, so even the slightest hesitation by people translates into a very large decline in numbers,” he said.

In-Stat on Wednesday forecasted a 20.5 percent drop in handset shipments in 2009 versus 2008. The market will not regain robust growth until 2011 when shipments are expected to increase 9.6 percent, according to In-Stat.

Nokia will have a lot to say about that Thursday.