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) 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), Netease.com Inc (NTES.O) and Giant Interactive Group Inc (GA.N), 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.

October-December advertising revenue forecast was kept at $31-$32 million.

Analysts on average expect the company to earn 29 cents a share, before items, and post quarterly revenue of $55.4 million, according to Reuters Estimates.

Sohu's Nasdaq-listed shares rose nearly 6 percent in after-hours trade to $63.32, after closing up 3 percent on Tuesday. ($1=7.392 Yuan) (Reporting by Sophie Taylor in Shanghai and Jennifer Robin Raj in Bangalore; Editing by Ian Geoghegan)