BARCELONA, Spain (Reuters) - Microsoft Chief Executive Steve Ballmer promised a Windows Phone update soon with more powerful Web graphics, and said new partner Nokia would supply "absolutely phenomenal" handsets.

The new strategic partnership has been received with skepticism in the market, but Ballmer said the scale that Nokia would bring to an already improved Microsoft mobile platform would be good news for operators, developers and consumers.

"We're off to a strong start. We know we have a lot of work to do," he said in a keynote address at the Mobile World Congress fair in Barcelona. "We have a lot of energy, optimism and a sense of tremendous opportunity."

"We're sure... Nokia's going to deliver absolutely phenomenal Windows phones," he said, without elaborating when the first results of the collaboration would hit the market.

Ballmer invited Nokia CEO Stephen Elop to join him on stage. "Microsoft and Nokia together represents a natural partnership. People are getting it," he said.

Nokia shares closed down 5.3 percent, while Microsoft shares traded down 0.3 percent at 1638 GMT in a flat market.

Microsoft has struggled to gain significant market share in wireless, although its Windows Phone 7 software launched a year ago has been well received.

Ballmer said a free update coming soon would include more powerful Web graphics that draw on the phone's hardware as well as software, integration with Twitter and a better ability to run several tasks at the same time.

He called it a significant release and said it would be coming "later this year," without saying exactly when.

(Reporting by Georgina Prodhan; Editing by David Hulmes)