UPDATE 3-Fox-Pitt's Trone sees Q4 loss for Goldman Sachs

(Recasts; adds details; analyst comments; share movement)

Nov 11 (Reuters) - Fox-Pitt Kelton analyst David Trone forecast a fourth-quarter loss for Goldman Sachs Group Inc (GS.N) and said he expected the bank's principal investment portfolio to experience an unusually large markdown to reflect the dramatic slide in global equity values.

In a separate note, brokerage firm Sandler O'Neill Partners also saw a fourth quarter loss for Goldman, but raised its rating to "buy" from "hold," saying the loss was priced into the stock.

"The operating environment will likely remain challenging for the foreseeable future, and if global asset valuations continue to spiral downward, there could be significant downside to owning GS shares," analyst Jeff Harte said in a note to clients.

Harte forecast a fourth-quarter loss of $1.72 per share for the company. He earlier saw a profit of $1.43 per share. The analyst cut his 2009 earnings estimate to $9.75 from $12.12 a share.

Fox-Pitt analyst Trone said he expects the company's principal investment portfolio to be marked down by $2.7 billion

The analyst also expects credit-asset gross write-downs of about $2 billion, including $409 million in residential mortgage, $558 million in commercial mortgage and $950 million in leveraged loans.

Trone and Harte are among the latest in a string of Wall Street analysts to forecast a fourth-quarter loss for Goldman. In the past two weeks, analysts at Morgan Stanley, Merrill Lynch, JP Morgan Securities, UBS and Barclays Capital have all said they expect Goldman to post a fourth-quarter loss.

Analysts expect the company to report a quarterly loss in the range of $2.50 per share to 40 cents a share. At the upper-end of this range is Barclays Capital, which cut its a estimate from a previous profit view of $2.71 per share.

"We are making this cut now because of the dramatic equity market declines, to which we believe GS is most exposed through its private equity business," Barclays analyst Roger Freeman had said in a note dated Nov. 10.

LOSS EXPECTED

Fox-Pitt analyst David Trone forecast a fourth-quarter loss of $1.55 per share for Goldman. He earlier expected a profit of $2.59 per share. He also cut his 2009 EPS estimate to $9.08 from $12.15, "reflecting the lingering of the crisis of confidence within global capital markets."

However, Trone said he does not expect Goldman to take material writedowns from AIG (AIG.N) exposure. "Goldman management said AIG posted collateral and where there were disputes, Goldman hedged the difference," Trone said in a note to clients.

"GS shares are near their all-time low, as they appear to be under pressures similar to troubled peers. However, should mgmt weather the near-term storm, we believe Goldman will fare better than many expect in the long-run," Trone added

Shares of Goldman Sachs fell more than 6 percent to $66.68 in morning trade on the New York Stock Exchange, before regaining losses to trade at $73.69 on Tuesday afternoon. (Reporting by Arup Roychoudhury in Bangalore; Editing by Jarshad Kakkrakandy) (arup.roychoudhury@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: arup.roychoudhury.reuters.com@reuters.net))