UPDATE 2-Embraer shares fall on weak business jet outlook
* Shares lose over 5 pct, worst session in a year
* CEO sees economic concern sapping Legacy demand in China (Adds details from earnings, updates share price)
By Brad Haynes and Roberta Vilas Boas
SAO PAULO, July 26 (Reuters) - Shares of Brazilian planemaker Embraer SA faced their worst session in a year on Friday, after executives warned that economic concerns seemed to be weakening demand for bigger business jets.
The stock dropped as much as 5.6 percent in Sao Paulo trading, giving back its gains this month as investors took profits on its more than 50 percent rise this year.
Chief Executive Frederico Curado said Embraer's private jet division was on track to hit the lower end of its 2013 delivery and revenue targets as it faced softer demand for the Legacy 650 business jets in the "super mid-size" segment.
"There is overall some macroeconomic concern that there may be some bumps ahead. The executive jet segment is very sensitive to that," Curado told analysts on a call to discuss earnings.
Questions about deliveries in the second half led management to maintain their profitability forecasts for the year despite a currency swing that eased local labor costs, said Chief Financial Officer Jose Antonio Filippo.
The 10 percent depreciation of Brazil's currency, the real , also drove up Embraer's tax liabilities, triggering an unexpected net loss for the second quarter.
The late Thursday earnings and executives' cautious tone took the steam out of Embraer's stock, which is the best performer on the Bovespa stock index this year.
Curado said it was still too early to tell whether softness in its executive jet division was due to stiff competition or slumping demand, adding that geographic trends were mixed.
"We saw stronger demand last year from China, for example, than we are seeing this year," he said. Embraer has bet big on the Legacy 650 in China, where it set up a joint venture to manufacture the aircraft.
Curado said the Legacy jets are also underperforming in the U.S. market, where corporate profits have hit record highs but Embraer's market share in the segment lags other regions. (Editing by Gerald E. McCormick, Nick Zieminski and Chris Reese)