UPDATE 1-Canon cuts outlook, hit by euro crisis, China boycott


* Canon cuts full-year op forecast 8.7 pct to 356 bln yen

* Q3 op profit falls 42 pct to 70.9 bln yen, below forecast

* Revises FX rate to 78 yen/$ vs 80, camera sales f'cast cut

TOKYO, Oct 25 (Reuters) - Japan's Canon Inc cut its full-year earnings outlook and posted a weaker-than-expected quarterly operating profit, hit by a weak global economy as the euro zone crisis drags on and a drop in Chinese sales as consumers boycott Japanese products.

The camera and printer maker, which generates 80 percent of its revenue abroad, has been hit particularly hard by sluggish demand in the euro zone and a strong yen. It also temporarily cut production at its factories in China in the wake of last month's anti-Japan protests.

Canon's operating profit for the July-to-September quarter fell 42.2 percent from a year earlier to 70.88 billion yen ($887.94 million), the company said on Thursday, falling short of the average forecast of 99.9 billion yen in a poll of six analysts surveyed by Thomson Reuters I/B/E/S.

The firm also cut its operating profit outlook for the year to December by nearly 10 percent to 356 billion yen from its July forecast of 390 billion yen.

``I think this is pretty much within the range that people expected for a downwards revision so I don't get a very negative feeling about it,'' said Makoto Kikuchi, CEO of Myojo Asset Management.

As one of the first Japanese technology firms to post earnings, Canon is seen as an early barometer of corporate results in Japan.

Canon, considered a leader in profitability in corporate Japan with its aggressive cost-cutting, has seen declining sales for its compact cameras, while tighter budgets across Europe have undermined demand for its office printers.

The maker of IXY and PowerShot cameras, which competes with Nikon and Sony Corp, is threatened by the continuing popularity of smartphones made by the likes of Apple Inc and Samsung Electronics Co Ltd.

Canon cut its full-year compact camera sales forecast to 19 million units from 21 million, while the forecast for interchangeable lens-cameras was cut to 8.8 million from 9.2 million.

The company said a Chinese boycott of Japanese goods, as a territorial dispute drags on between Beijing and Tokyo, was having an impact on sales of its cameras and consumer products.

Canon revised its forecast average dollar rate for the full year to 78 yen from 80 yen, although it kept is euro rate forecast unchanged at 100 yen.

Shares in Canon ended up 2.2 percent at 2,645 yen ahead of the results announcement. The stock is down more than 20 percent this year. Tokyo's benchmark Nikkei average rose 1.1 percent on Thursday and is up 7 percent this year.