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UPDATE 2-SAP warns exchange rate impact to worsen in Q2

* Sees Q2 forex hit of 8 pct points on operating profit

* FY profit hit would be 5 pct points at March forex rates

* Q1 operating profit 919 mln euros, below poll of 961 mln

* Affirms FY outlook at constant currencies

* Shares indicated 3.3 percent lower

(Adds CEO comments, background, shares)

FRANKFURT, April 17 (Reuters) - German business software maker SAP warned on Thursday that it expected the negative impact of volatile exchange rates to worsen in the second quarter as the strong euro weighs on its financial results.

The gains in the euro are causing headaches at many European companies that rely on revenues from abroad. The euro has climbed 2.3 percent against the U.S. dollar and nearly 6 percent against Japan's yen in the past six months.

SAP said its software and software-related service revenues would take a 6 percentage point hit in the second quarter if exchange rates remained at March levels. Operating profit excluding special items would be 8 percentage points lower.

That compares with a first-quarter impact of 5 percentage points on both software and software-related service revenues and operating profit.

Shares in SAP were indicated to slide 3.3 percent when trading begins, according to pre-market data, while Germany's blue-chip index was seen unchanged.

For the full year, SAP expects revenues to take a 4 percentage point exchange rate hit, while operating profit will be negatively impacted by 5 percentage points.

At constant currencies, it still sees its full-year operating profit rising to 5.8-6.0 billion euros ($8.0-8.3 billion) from 5.51 billion last year.

SAP reported a 2 percent rise in first-quarter operating profit, excluding special items, to 919 million euros, fuelled by its web-based software products.

That was below analysts' average expectation of 961 million euros in a Reuters poll.

SAP said it saw a solid regional performance in Europe, despite uncertainties in Russia amid the Crimea crisis, which has a dampening effect on its activities in the region, SAP CEO Bill McDermott said.

"We do see that some things are moving slower there and they are growing less fast than they were but nothing is lost and we expect the business to be restored over time," he told journalists.

CLOUD BUSINESS

First-quarter revenue rose 2 percent to 3.7 billion euros, helped by SAP's internet computing, or cloud business, where revenues jumped more than a third to 221 million euros.

Earlier this year, SAP pushed back its profit target as it waits for subscription revenue from cloud-computing to gather pace and invests more in the business to keep up with a fast-growing market.

The Walldorf, southern-Germany based company and global rivals such as IBM and Oracle are racing to meet surging demand for web-based software products.

The global cloud services market grew by almost a fifth to an estimated $131 billion last year, research firm Gartner says.

IBM Markets Intelligence estimates the market could be as big as $200 billion by 2020, while forecasts from International Data Corporation (IDC) predict public IT cloud services will have a compound annual growth rate (CAGR) of 23.5 percent from 2013 to 2017, five times that of the IT industry as a whole.

SAP's customers, which include Coca-Cola, McDonald's and Vodafone, are moving to cloud computing because there are no upfront costs for programme licences, dedicated hardware or installation, making them less vulnerable to economic downturns.

SAP entered the cloud business in 2012 after spending $7.7 billion on buying internet-based computing companies Ariba and SuccessFactors. That is about 10 percent of its current market capitalisation.

The company expects its total revenue to rise to at least 22 billion euros by 2017, of which 3-3.5 billion will come from the cloud business, compared with 787 million euros last year. SAP made 16.9 billion euros in total revenue in 2013.

Analyst have suggested SAP will need to make more acquisitions to reach that goal. CEO McDermott has said he would look at potential targets but said on Thursday he was not in "hot pursuit".

SAP's stock has lost about 6 percent so far this year, faring slightly worse than the European technology index which is down almost 5 percent.

($1 = 0.7243 Euros)

(Reporting by Harro ten Wolde; Editing by Maria Sheahan and Stephen Coates)