UPDATE 1-Cathay Fin Q3 net lags forecast, beats Q2

* Q3 profit below estimate but improves from Q2 on stocks

* Cathay shares down over 2 pct before results (Recasts with details)

TAIPEI Oct 8 (Reuters) - Cathay Financial (2882.TW), Taiwan's top listed financial holding company, posted an 58 percent year-on-year fall in third-quarter net profit, but the result improved from the second quarter on gains in stock investments.

Cathay Financial booked a net profit of T$2.466 billion ($77 million) for the third quarter, up from T$586 million in the second quarter but down from T$5.93 billion recorded in the third quarter a year earlier.

Analysts had expected Cathay to post a net profit of T$4.03 billion for July-September, according to a survey by Thomson Reuters I/B/E/S.

The third-quarter net profit was based on Reuters' calculations after Cathay announced in a statement on Thursday that its January-September net profit was T$7.85 billion, compared with a net profit of T$3.75 billion a year earlier..

Cathay Financial and its Taiwanese rivals have seen their fortunes improve in recent months, with the global economy showing signs of stabilising and as investors bet that warming ties with China would be good for business.

Cathay Financial shares closed down 2.15 percent on Thursday, exceeding the main TAIEX's .TWII 1.38 percent fall. (US$1=T$32.1) (Reporting by Rachel Lee, writing by Baker Li; Editing by Chris Lewis)