UPDATE 2-Toyota operating profit may fall by quarter-Nikkei

(Adds details, company comment, updates share price)

TOKYO, April 17 (Reuters) - Toyota Motor Corp's (7203.T) 2008/09 operating profit is likely to fall by around a quarter, underscoring tough business conditions for Japanese manufacturers, the Nikkei business daily said on Thursday.

The drop is expected to come from an economic slowdown in the United States, the company's biggest market, as well as recent sharp gains in the yen JPY=, the paper added.

Despite the report, shares in Toyota, Japan's top auto maker, climbed more than 3 percent on Thursday along with a jump in the stock market as a whole.

The paper said Toyota's operating profit would likely be around 1.7-1.8 trillion yen ($16.7-17.7 billion) in the business year to March 2009, down 22-26 percent from the company's forecast of a 2.3 trillion yen profit for the year just ended.

It also lags a consensus profit projection of 2.1 trillion yen for 2008/09 in a poll of 22 analysts by Reuters Estimates.

Toyota spokesman Paul Nolasco declined to comment on the report, saying the company is scheduled to announce its earnings results and forecasts on May 8.

Slowing demand in the United States also hit Toyota's truck unit Hino Motors (7205.T). The Nikkei said Hino would stop producing commercial vehicles at its plant in California. That would be the first such pullback by a Japanese auto maker in the United States. [ID:nT277197]

The paper said Toyota's 2008/09 sales are likely to come below the 26 trillion yen that it has forecast for the year that ended in March due to a stronger yen and slow sales of high-priced vehicles such as pickups and sport utility vehicles in the United States.

The company's global unit sales this business year are seen topping that of 2007/08 thanks to strong demand in emerging markets and oil-rich countries, it said.

Toyota shares were up 2.9 percent at 5,020 yen by midday, while the Nikkei average .N225 rose 2.3 percent. Shares in Hino Motors rose 4.2 percent to 639 yen. ($1=101.76 Yen) (Reporting by Elaine Lies, Sachi Izumi and Kiyoshi Takenaka; Editing by Hugh Lawson)