UPDATE 1-Toyota to build $600 mln compact car plant in Brazil

* Production to begin second half of 2012

* Initial production of 70,000 compact cars for Brazil market

* Exports planned in future (Adds details, background)

SAO PAULO, July 15 (Reuters) - Toyota Motor Corp 7203.T said on Thursday it would invest around $600 million for a third factory in Brazil, with production set to begin in the second half of 2012.

Construction of the factory, to be located in Sorocaba, in the state of Sao Paulo, will begin in September. It will initially build 70,000 vehicles a year for the local market. Future plans include production for export, Toyota said in a statement.

Toyota, the world’s biggest automaker, had purchased the land for the factory in mid-2008 with plans to produce a new compact car targeted at emerging markets. The car, still under development, will share the underpinnings of the entry-level Etios model to go on sale this year in India.

The Sorocaba factory will employ about 1,500. Toyota currently has two factories in Brazil, both in the state of Sao Paulo.

Reporting by Cesar Bianconi in Sao Paulo and Chang-Ran Kim in Tokyo; Writing by Ana Nicolaci da Costa; Editing by Sofina Mirza-Reid