UPDATE 1-Hitachi down 10 pct, sees wider loss than consensus

* Loses $1.3 bln in market value

* Forecasts $2.8 bln loss in 09/10, 4th year in red

TOKYO, May 13 (Reuters) - Shares in Hitachi Ltd (6501.T), Japan's biggest electronics maker, tumbled 10 percent after its wider-than-expected loss estimate spooked investors who expected its restructuring steps would help improve its earnings.

A price slump and weak demand have hurt almost every corner of Hitachi's sprawling operations, hitting its auto and chip businesses especially hard and forcing the company to book the biggest-ever annual loss by a Japanese manufacturer.

Hitachi shares lost 128 billion yen ($1.3 billion) in market value on Wednesday after it forecast a 270 billion yen net loss for the year to next March, more than double the consensus of a 125.2 billion yen loss predicted in a poll of 16 analysts by Thomson Reuters. [ID:nT142706]

The loss estimate, meaning it would lose money for a fourth straight year, would still be much smaller than the 787.3 billion yen loss for last financial year.

That massive loss had prompted Hitachi to map out a $5 billion cost-cutting plan for the current year and shift resources to more stable infrastructure operations, and it had said it expected tough going again this year.

"Hitachi is making progress in structural reforms at its challenged businesses such as automotive and digital media/consumer electronics," Credit Suisse analyst Hideyuki Maekawa said in a note to clients.

"But its latest projection seems to make clear that its cost-cutting efforts will not be enough to offset the impact of reduced revenues in its profitable businesses."

JPMorgan Securities analyst Yoshiharu Izumi said even though the big loss forecast was a negative surprise, Hitachi seems to be trying to push forward possible restructuring this financial year in order to sharply revive its earnings next year.

"Hitachi's guidance may actually be reflecting the current market conditions most accurately," he said. "Other large electronics companies are being rather optimistic to forecast profits."

Rivals Fujitsu Ltd (6702.T) and NEC Corp (6701.T) have predicted a return to net profit this year, while Toshiba Corp (6502.T) sees an operating profit against a $2.6 billion loss a year earlier.

On an operating basis, Hitachi forecast a 30 billion yen profit in the year to next March, which would be down 76 percent from last year but beat analysts estimates for an 18 billion yen operating loss.

Hitachi plans to spin off its automotive system and consumer business arms in July in a bid to turn around the struggling operations, while its chip joint venture, Renesas Technology, had begun merger talks with domestic peer NEC Electronics (6723.T).

Hitachi owns 55 percent of Renesas, and Mitsubishi Electric Corp (6503.T) owns the rest.

Hitachi shares lost 38 yen to 343 yen by the end of morning trade and was the biggest percentage loser on the benchmark Nikkei average .N225, which inched up 0.1 percent. ($1=97.34 Yen) (Reporting by Sachi Izumi; Editing by Michael Watson)