UPDATE 2-Mazda, M'bishi Motors post 3rd straight qtrly loss

* Mazda Q1 op loss at Y28 bln vs Y36.9 bln consensus estimate

* M'bishi Motors Q1 op loss at Y29.6 bln vs Y26 bln consensus

* Mazda, Mitsubishi Motors keep annual forecasts unchanged

* Mitsubishi Motors shares end up 3.6 pct after results

* Mazda shares close up 8.6 pct before results (Recasts with Mazda results)

By Chang-Ran Kim, Asia autos correspondent

TOKYO, July 30 (Reuters) - Japan's Mazda Motor Corp (7261.T) and Mitsubishi Motors Corp (7211.T) posted losses for a third straight quarter as car sales plunged worldwide, and kept their annual forecasts relying on cost cuts to offset weak demand.

The second-tier automakers' results contrasted with surprise first-quarter profits reported a day earlier by bigger Japanese rivals Honda Motor Co (7267.T) and Nissan Motor Co (7201.T), whose shares jumped on Thursday and pulled the rest of the sector up with them. [ID:nT188181] [ID:nT254142]

Automakers are squeezing costs to reduce losses as production capacity remains severely underused, but are looking at an improvement in output on a quarterly basis for the rest of the year as they bring inventory under control.

"The business environment is still uncertain," Mazda Chief Financial Officer Kiyoshi Ozaki told a news conference.

"But our fixed costs have been reduced dramatically, and our inventory adjustment is done in Europe," he said, adding that first-quarter losses more than halved from the previous quarter even though it shipped fewer vehicles.

Mazda, held 13 percent by Ford Motor Co (F.N), made an operating loss of 28.0 billion yen ($295 million) in the April-June quarter, swinging from a profit of 28.3 billion yen a year earlier. A consensus estimate of four analysts surveyed by Thomson Reuters had put the loss at 36.9 billion yen.

Its first-quarter net loss was 21.5 billion yen, compared with a profit of 15.0 billion yen a year ago. Revenue fell 45 percent to 428.23 billion yen, as global retail sales dropped 27 percent to 263,000 units.

Mazda kept its forecasts for an operating and net loss of 50 billion yen.

SHARES RISE

Mitsubishi Motors had an operating loss of 29.6 billion yen ($312 million), reversing a profit of 9.86 billion yen a year earlier. Two analysts' average estimate had called for a 26 billion yen loss.

Its first-quarter net loss was 26.4 billion yen, compared with a profit of 10.3 billion yen last year. Revenue sank 58 percent to 259.1 billion yen, as global retail sales slid 32 percent to 213,000 units in the quarter.

Mitsubishi Motors, maker of the Pajero sport utility vehicle, had been counting on its big presence in Russia and Ukraine to drive vehicles sales growth, but it has had to alter its strategy after demand collapsed in those markets since late last year.

Its sales declines have been so sharp that it now ranks No. 7 among Japan's eight listed carmakers, outselling only Fuji Heavy Industries Ltd's (7270.T) niche Subaru brand. Just two years ago, it was Japan's fifth-largest automaker.

President Osamu Masuko conceded earlier this year that deep cost-cutting measures were the main hope for improving profits, rather than a growth in vehicle sales or revenue.

For the financial year to March 2010, Mitsubishi Motors kept its operating profit forecast at 30 billion yen and its net profit forecast at 5 billion yen.

Shares in Mazda have surged 69 percent in the year to date, while Mitsubishi Motors is up 39 percent so far this year. Tokyo's transport subindex .ITEQP.T gained 45 percent in the same period.

Before the results, Mazda closed up 8.6 percent. Mitsubishi Motors ended up 3.6 percent after the results were announced. ($1=94.91 Yen) (Editing by Chris Gallagher)