SHANGHAI - Nissan Motor, expected to return to profitability in the current financial year, hopes to maintain the improved earnings momentum into 2010, its chief executive said on Thursday, driven largely by growth in emerging markets such as China.

The No. 3 Japanese auto maker revised its annual outlook last week to a profit from a loss as soaring sales in China, the world's biggest auto market, helped bolster quarterly earnings beyond market expectations.

Our results are improving. Hopefully the momentum will continue into 2010, Ghosn told Reuters on the sidelines of an industry forum in Shanghai.

Nissan, owned 44 percent by Renault SA, expects an operating profit of 120 billion yen ($1.34 billion) in the year to March, instead of the 100 billion yen loss it had forecast previously, thanks to explosive growth in China.

Ghosn, however, did not specify how much improvement Nissan was expected to make financially next year.

Shares of Nissan rose 1.4 percent to close at 662 yen, outperforming a 0.7 percent fall in the Nikkei .N225 stock average.

CHINA MARKET

Nissan produces cars and trucks with Dongfeng Motor Group Co (0489.HK) in China, the only major bright spot amid a global industry downturn as government incentives, including cuts in sales tax for cars with engine sizes of 1.6 litres or smaller, bolstered automobile demand.

In the first 10 months, the venture sold 745,266 vehicles, up 25.7 percent from a year earlier, with sales in October surging 71.7 percent to 89,136 units, company data showed.

The explosive growth was mostly driven by Nissan's small cars eligible for the tax incentives, including Tiida and Sylphy.

Rival Honda Motor, which makes the Accord among other models in tie-ups with Dongfeng Motor and Guangzhou Automobile, lagged far behind due to a limited offering of compact cars in its line-up.

From January to October, Honda's China car sales rose 17.3 percent to 459,994 units, with sales of Accord up merely 3.9 percent.

When asked when Renault, one of the very few foreign automakers that do not have a presence in China, would get into the game, Ghosn, also CEO of Renault, said: There is no doubt in my mind Renault will come.

The focus of the alliance now is making sure Nissan develops its presence as fast as possible. Renault will be joining when it is ready in the future. ($1=89.85 Yen) (Reporting by Fang Yan, David Lin and Jacqueline Wong)

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