UPDATE 1-Canon says may raise camera sales forecast

* Canon to launch smaller high-quality camera -executive

* Sales of compact cameras on track to meet forecast-Canon (Adds details)

TOKYO, July 20 (Reuters) - Japan's Canon Inc 7751.T said on Tuesday it is thinking of slightly raising its camera sales forecast for 2010 from the current 25.9 million units, thanks to better-than-expected sales in the profitable interchangeable lens camera segment.

Sales of compact cameras, forecast at 21 million units, are in line with expectations, Masaya Maeda, head of the Image Communication Products division at the world’s biggest digital camera maker, said in an interview.

Canon is likely to post a 180 percent jump in profits to about 182 billion yen ($2.10 billion) for the January-June period, the Nikkei business daily said earlier this month. The company last revised its annual camera sales forecast upwards in April and is set to announce its April-June results on July 27.

Maeda also said the company was working on a smaller version of its upmarket single-lens reflex (SLR) cameras in a bid to compete with the new breed of mid-range so-called "mirrorless" cameras launched by Sony Corp 6758.T, Olympus Corp 7733.T, and Panasonic Corp 6752.T.

Nikon 7731.T also has a new camera in the works, though it has yet to reveal details.

Maeda did not give further details of the new camera, including whether the internal structure would include a mirror.

Competitors have made high-quality cameras more compact by removing the mirror that enables the user to look at the actual scene through a viewfinder, creating a new market segment that is popular in Japan and which analysts say may grow rapidly.

“It’s not a question of whether or not you have a mirror. There is a consumer need for good-quality cameras to be made smaller,” Maeda said. “We will meet this need.”

He denied this would be difficult without removing the internal mirror, adding that Canon had produced very small SLR cameras in the past.

One analyst said a smaller, lighter SLR camera would likely be good news for Canon.

“This would be very positive,” said Kazumasa Kubota of Okasan Securities. “Looking directly at something through a viewfinder is different from seeing it indirectly via semiconductors,” he added. ($1=86.76 Yen) (Editing by Michael Watson)