* Q3 net loss 1.49 bln eur vs restated profit 324.9 mln year ago
* Reiterates sees 2011 net loss of 700-800 mln euros
* Says retained earnings may cover most of capital shortfall
* Core Tier 1 capital ratio slips to 8.8 pct (Recasts with comments from analyst conference call)
VIENNA, Oct 28 (Reuters) - Erste Bank ruled out taking more state aid from Austria as emerging Europe's second-biggest lender tries to fill an estimated capital shortfall of nearly 750 million euros ($1.06 billion) by mid-2012.
A first tranche of non-voting state capital the bank got in 2009 was on "very friendly" terms, Chief Executive Andreas Treichl told a conference call on Friday after the bank released a well-flagged quarterly loss of 1.49 billion euros.
"I do think that whatever will come up, the next tranche of state capital will be substantially less friendly. I will avoid this at all cost," he said, insisting the bank can use retained earnings to cover the lion's share of the extra capital.
European regulators highlighted a 59 million euro capital gap at Erste, based on bank stress tests that used first-half balance sheet data adjusted for the market value of European sovereign debt holdings at the end of September.
Regulators still need to calculate how much banks need to reach a 9 percent core Tier 1 ratio -- a measure of capital to risk-weighted assets that reflects their ability to absorb shocks -- based on data for the first nine months of 2011.
Erste's own estimate is it will need an extra 750 million euros or so, Treichl said.
He did not directly answer a question on whether Erste could sell common shares to bolster its balance sheet, should retained earnings fall short of plan.
"We want to have the capital that allows us to sail safely through crisis but don't want to build up cushions that are not necessary." He said that meant 9 percent plus a small buffer would suffice, "but that's it for us".
Erste could also improve capital adequacy by reducing risk-weighted assets or deconsolidating minority stakes in savings banks with which it has a mutual liability pact, he said.
Markets were unimpressed.
Erste shares fell 4.6 percent to 17.30 euros by 1025 GMT, lagging a 0.1 percent gain in the Stoxx European banking sector index but outperforming Austrian peer Raiffeisen Bank International (RBI) , down 7.5 percent.
Regulators say RBI needs more capital than Erste, although RBI has disputed their calculations.
Excluding 540 million euros in non-voting capital Erste raised from private investors during the financial crisis, its core Tier 1 capital ratio slipped to 8.8 percent at the end of September from 9.2 percent at the end of last year.
Excluding 1.2 billion euros in state participation capital, the ratio dipped to 7.4 percent from 7.7 percent in December.
Erste surprised markets on Oct. 10 with a profit warning and news it would not pay a common share dividend on 2011 results after taking hits from foreign-currency loans in Hungary and euro zone sovereign debt.
Losses on an off-balance sheet credit default swap (CDS) portfolio and writedowns in Romania also pummelled Erste, which sees a 2011 net loss of up to 800 million euros.
Erste's top management spent much of the analysts' call defending its handling of the CDS portfolio -- subject of an Austrian watchdog probe -- which it now treats as derivatives, and marks to market rather than as financial guarantees.
The bank said it cut its CDS portfolio to 300 million euros from 5.2 billion at the end of September without triggering fresh losses. It aims to close out the CDS book within days.
It expected business in key market Romania to start picking up, but painted a bleak picture for Hungary, where it launched a major revamp and could lose money through 2013.
Non-performing loan ratios in both countries were set to peak next year, Erste said.
Net exposure to the sovereign debt of Greece, Ireland, Portugal, Spain and Italy was 3 billion euros as of Oct. 27, down from 3.59 billion at the end of September.
($1 = 0.707 Euros) (Reporting by Michael Shields, editing by Sylvia Westall and David Hulmes)