Japan Q3 GDP growth seen revised up to 2.7 pct

TOKYO, Dec 3 (Reuters) - Japan's economy probably grew slightly more than initially estimated in the three months to September, economists said on Monday following a smaller-than-expected drop in capital spending.

Forecasts for July-September gross domestic product growth by 25 economists centred on an expansion of 0.7 percent from the previous quarter, or 2.7 percent on an annualised basis.

That would be up slightly from the initial reading of a real 0.6 percent rise, or annualised growth of 2.6 percent.

The revised GDP data is due out at 8:50 a.m. on Friday (2350 GMT Thursday).

"It would not be a surprise to see the (quarter-on-quarter) growth rate revised up to 0.7-0.8 percent," said Takehiro Sato, an economist with Morgan Stanley.

A Ministry of Finance survey showed Japanese companies reduced spending on plant and equipment by 1.2 percent in July-September compared with the same quarter a year earlier, less than economists' median forecast of 2.0 percent fall.

Economists said a sampling change in the survey since April meant the data is probably underestimating the real trend in capex.

On a seasonally adjusted basis and excluding software, capital spending was up 4.4 percent from April-June, when a fall in capex led the economy to post a contraction of 0.4 percent, or an annualised rate of 1.6 percent.

Capital spending and exports are the main engine of Japan's current growth cycle that started in 2002.