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UPDATE 2-Toyota cuts full-year sales forecast on sluggish Asian recovery

* Toyota lowers FY sales f'cast by 1 pct, profit unchanged

* World's top automaker cites weak sales in emerging Asia

* Q2 profit supported by weak yen, lower costs (Recasts, adds comment, details)

By Naomi Tajitsu

TOKYO, Nov 5 (Reuters) - Toyota Motor Corp cut its full-year revenue forecast on Thursday as the Japanese company expects weaker vehicle sales in emerging Asian countries, where demand for cars has been hit by slowing growth.

Slowing sales may knock Toyota from its perch as the world's biggest selling automaker, a title it has held for the past few months after unseating Volkswagen AG in an ongoing, closely contested race.

Hit by a slump in sales in Indonesia and Thailand during the July-September quarter, Toyota lowered its revenue forecast by 1 percent to 27.5 trillion yen ($225.82 billion), citing an uncertain economic outlook in emerging Asian countries.

Like many Japanese automakers, Toyota has been enjoying solid growth in the United States, which is on track for a record year of annual sales due to an improving economy and lower gasoline prices.

But it is a different story in Southeast Asia, the Middle East and other emerging regions, where Toyota has a bigger presence than other car makers, analysts said.

"Toyota is more regionally diversified than most Japanese automakers, and the regions where it has a bigger presence than its competitors, particularly in emerging countries, are the ones whose economies are slowing down the most," said Takaki Nakanishi, director at auto industry researcher Nakanishi Research Institute.

The automaker said that while it expects to hit its annual China target of 1.1 million units, profitability in the world's largest auto market is likely to worsen due a slowing economy.

"The auto market especially in developed economies will remain strong, but Asia may not recover as much as we are hoping to see, so we are more cautious on our emerging market forecast," Managing Officer Tetsuya Otake told reporters.

Still, Toyota expects revenue including sales and other sources of income to be 1 percent higher than last year, and it kept its operating profit forecast unchanged at 2.8 trillion yen, as the effects of a weaker yen and cost reduction efforts would offset easing volumes and rising marketing-related expenses.

WEAK YEN BOOSTS

Toyota has topped the leader board for global auto sales in the past few months, selling 7.49 million cars worldwide in the year to September, more than No. 2 Volkswagen AG's 7.43 million during the same period.

Operating profit rose 26 percent to 827.4 billion yen ($6.81 billion), just ahead of a consensus estimate, while net profit for the quarter rose 13.5 percent to 611.72 billion yen.

Ongoing yen weakness is continuing to bolster profits at Japanese automakers, with Toyota expecting a sluggish domestic currency to add 65.0 billion yen to its bottom line for the year ending March 2016.

On Thursday, it raised its full-year dollar/yen assumption rate to 118 yen from a previous forecast of 117 yen. This compares with the yen's current trading price around 122 yen .

Yen weakness and strong U.S. sales are also benefiting Japan's smaller automakers, with both Fuji Heavy Industries , which produces the Subaru brand, and Mazda Motor Corp both raising their full-year forecasts for sales and profits on Thursday.

Toyota said it would continue to investigate Takaka Corp's air bag inflators and remained committed to using "higher quality" components, but did not elaborate its position on whether it would keep using air bag inflators made the parts supplier at the centre of a global recall crisis. ($1 = 121.7800 yen) (Reporting by Naomi Tajitsu; Editing by Christopher Cushing and Louise Heavens)