UPDATE 1-Komatsu cuts forecasts as construction equipment slows

*Cuts annual net profit forecast by 13 pct to 190 bln yen

*To spend up to $303 mln to buy back 4 pct of stock

*Hit by stronger yen, slowdown in Europe, United States

*Shares end up 5 pct ahead of announcement (Recasts to lead on earnings, adds details)

TOKYO, Oct 29 (Reuters) - Komatsu Ltd (6301.T), the world's second-biggest maker of earth-moving equipment after Caterpillar Inc (CAT.N), cut its annual net profit forecast by 13 percent to below market expectations on slowing demand and a stronger yen.

The company also said it would spend up to 30 billion yen ($303 million) to buy back up to 4 percent of its stock, which has lost three-quarters of its value in the past five months on concerns a slowing global economy will hit demand for its machines.

Komatsu, whose Japanese rivals include Hitachi Construction Machinery Co (6305.T), said it now expects to book a net profit of 190 billion yen for the year to March instead of 219 billion yen, which would have been a record for seventh straight year.

That falls short of the market consensus of 210 billion yen from the average of 18 analysts polled by Reuters Estimates.

The revision also comes just a little over a month after Komatsu Chief Executive Kunio Noji told Reuters in an interview that he was confident the company would be able to hit its targets, helped by strong sales in China and other emerging markets.

Since then fears of global recession have deepened and the yen has surged against the dollar and the euro, slicing into Komatsu's profits because it generates about 80 percent of its revenues outside the Japanese market.

In addition to a sharp drop in the currencies of resource-rich economies, the dollar and the euro, Komatsu also attributed the revision to expectations that demand for construction equipment will remain slack in the U.S., Europe and Japan.

Komatsu is not alone. Earlier this week Hitachi Construction cut its net profit forecast by 17 percent while U.S.-based Caterpillar warned last week that the heady sales growth of recent years is grinding to a halt. [ID:nN17481917]

Komatsu said it would buy back as many as 40 million shares between Nov. 5 and Dec. 30.

Prior to the announcement, shares of Komatsu rose 5 percent to 854 yen. They have fallen 75 percent since marking a peak this year on June 5, underperforming a 43 percent drop in the benchmark Nikkei average .N225 in the same period. (Reporting by Mariko Katsumura and Nathan Layne; Editing by Chris Gallagher)