Nissan Motor Co's <7201.T> quarterly profit fell 15 percent on a stronger yen and sliding Japanese sales, but the decline was the slimmest among local automakers as a slew of new models helped Nissan beat the sector's growth in key markets.

Nissan, which overtook Honda Motor as Japan's second-biggest automaker last year, has been a standout particularly in China, where a lineup of small cars that qualified for tax incentives fueled 36 percent sales growth last year.

It was also among the few brands to grow in the tepid European market, helped by the new Juke crossover and the older Qashqai SUV.

For the full year to March 31, Nissan, owned 43 percent by France's Renault SA , raised its operating profit forecast to 535 billion yen from 485 billion yen. That matched the 534 billion yen projection in a survey of 26 analysts by Thomson Reuters I/B/E/S.

Third-quarter operating profit fell 15 percent to 114.00 billion yen, smack in line with an average estimate of 113.9 billion yen in a Reuters poll of eight analysts. Net profit fell jumped 78 percent to 80.07 billion yen.

Nissan's profits made in China are counted at the operating level, unlike those of Toyota Motor Corp <7203.T> and Honda Motor Co <7267.T>, because it reports under Japanese accounting rules.

COMPETITION TO HEAT UP

Chief Executive Carlos Ghosn has aggressively pushed Nissan into fast-growing markets such as China, India and Russia, and is credited for raising its profile as a pioneer in electric cars with the launch of the Leaf, the world's first mass-volume electric vehicle, in December.

But a slowdown in China's overall car demand could hit Nissan the hardest after the government pulled the plug on incentives on cars with engines smaller than 1.6 liters such as its Tiida model, at the end of 2010.

Nissan has also outperformed in the U.S. market but is set to face tougher competition this year as Toyota and Honda remodel top-selling cars such as the Camry and Civic.

Honda and Toyota also raised their profit forecasts for this year. Toyota's shares soared 5.2 percent after its earnings announcement on Tuesday and after it was cleared in a U.S. government safety probe.

Nissan's shares have gained 12 percent over the past three months versus a 16 percent rise in Tokyo's transport sector subindex <.ITEQP.T>. Before the results were announced, Nissan's shares ended up 2.5 percent at 893 yen.

(Editing by Anshuman Daga and Michael Watson)

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