UPDATE 2-Sohu raises Q4 outlook as online game booms

(Adds detail, background, previous BANGALORE)

SHANGHAI, Dec 5 (Reuters) - Chinese Web portal Sohu.com Inc (SOHU.O: Quote, Profile, Research, Stock Buzz) raised its fourth-quarter outlook as its Tian Long Ba Bu online martial arts game is proving more popular than expected, sending the company's shares up almost 6 percent after-hours.

Online games have wide appeal in China, where they make up one of the single largest Internet segments, linking thousands of players who compete within a virtual role-playing world.

Tian Long Ba Bu, developed by Sohu and launched in May, is based on a Jin Yong novel and translates to "Sky Dragon Eight Factions."

Peak concurrent users of the game have topped half a million, Sohu said, adding it expects the game to mature starting in the first quarter of next year.

China's online game market is expected to grow at an average 11 percent a year from 2007-2017, Credit Suisse said.

For Sohu, or "search fox" in Chinese, Tian Long Ba Bu marks a renewed foray into gaming, as the company looks beyond its search engine roots to social networking services like blogging and video-sharing.

Sohu had a 3.3 percent share of China's 2.91 billion yuan ($393.8 million) online game market in the third quarter, behind leaders Shanda Interactive Entertainment (SNDA.O: Quote, Profile, Research, Stock Buzz), Netease.com Inc (NTES.O: Quote, Profile, Research, Stock Buzz) and Giant Interactive Group Inc (GA.N: Quote, Profile, Research, Stock Buzz), according to research firm Analysys International.

Sohu raised its quarterly earnings forecast by 3 cents to 36-38 cents a share, excluding share-based compensation costs, and increased its total revenue forecast by $2 million to $55.5-$57.5 million.