UPDATE 3-Brunswick loss less than expected, shares jump

* Q3 loss $1.29/share; Street view loss $1.34

* Sales fall 36 pct to $665.8 mln, missing estimates

* Shares up more than 11 pct (Adds comments from conference call, updates shares)

By James B. Kelleher

CHICAGO, Oct 29 (Reuters) - Brunswick Corp (BC.N) reported a narrower-than-expected quarterly loss on Thursday, sending its shares up more than 11 percent, as aggressive cost-cutting helped offset continued weakness in its core marine market.

The world's largest maker of recreational boats as well as bowling, billiards and fitness products posted a third-quarter net loss of $114.3 million, or $1.29 a share, compared with a net loss of $729.1 million, or $8.26 a share, a year earlier.

Sales fell 36 percent to $665.8 million.

Analysts, on average, had expected a net loss of $1.34 a share on sales of $701.1 million, according to Thomson Reuters I/B/E/S.

"The revenue shortfall does not concern us since the current period is about drawing down channel inventories, and the only way to accomplish that is by not producing and selling boats," said Hayley Wolff, an analyst at Rochdale Securities.

For several years, rising energy prices, increasingly tight credit and deteriorating consumer sentiment have weighed on worldwide marine sales. Brunswick's chief rival, Genmar Holdings Inc, the world's No. 2 boatmaker, filed for bankruptcy earlier this year.

Brunswick, which makes boats under dozens of brand names including Hatteras, Sea Ray, Bayliner and Crestliner, as well as Mercury-brand engines, has responded aggressively to the downturn, slashing production, cutting its work force, shuttering plants and hoarding cash.

The focus on liquidity has paid off. Brunswick said it had $624 million in cash and cash equivalents at the end of the third quarter, up from $307 million at the start of the year.

It said it retired notes maturing in 2011 during the quarter, "which eliminates any material debt maturities over the next three years."

But the headwinds continue. During a conference call Dusty McCoy, the company's chief executive, said the marine industry was on course to record its worst year in at least five decades with heavy discounting and continued dealer bankruptcies compounding the challenges.

"The overall outlook in our view remains uncertain," McCoy said. "Our task is to remain patient and execute well."

During the most recent quarter, sales at the company's marine engine unit fell 29 percent to $363.5 million, while boat sales fell 62 percent to $118.2 million.