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UPDATE 1-Renault says revenue weighed down by Nissan, lower diesel engine demand

Gilles Guillaume and Christian Lowe

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* Group Q3 revenues fell 1.6 % to 11.3 bln euros

* Renault sales were down 4.4 %

* Renault says sales to its partners fell

* Demand for its diesel engines declined (Adds detail)

PARIS, Oct 25 (Reuters) - French carmaker Renault's group revenue fell in the third quarter, weighed down by a drop in production at partners Nissan and Daimler as declining demand for diesel engines added to the effects of a slowing global market.

The company, which owns 43.4% of Japanese manufacturer Nissan, said Renault group revenue fell 1.6% to 11.296 billion euros. It also said the group's third-quarter sales by volume were down 4.4% to 852,198 vehicles.

Renault had already flagged the weaker revenue in a profit warning last week, which sent its shares falling. On Friday it offered explanations for the worse-than-expected numbers.

Besides selling Renault-branded vehicles, the company also uses its plants to manufacture vehicles for its partner, Nissan, and for Daimler, and it is a specialist in making diesel engines for other automakers.

Sales of the vehicles it makes for partners have slowed, with a knock-on effect on Renault's revenues, while demand for diesel engines in Europe has declined.

Renault said those effects were compounded by the closure of the Iranian market since last year as a result of U.S. trade sanctions.

Renault has been trying to regain momentum after the November 2018 arrest in Japan of Carlos Ghosn, the head of the Renault-Nissan alliance, on financial misconduct charges that he denies.

Earlier this month, Nissan appointed a new chief executive and days later Renault CEO Thierry Bollore -- who had been appointed under Ghosn -- was pushed out, to be replaced on an interim basis by Renault finance director Clotilde Delbos.

Issuing its quarterly results on Friday, Renault revised downwards its forecasts for the growth of the global auto market, saying it expected a year-on-year decline in 2019 of around 4%, compared to around 3% previously.

In its profit warning last week, Renault had said sales were likely to drop between 3% and 4% this year, compared with its previous forecast for a similar outcome to 2018.

The company also said last week its operating margin was set to come in at 5%, versus a previous 6% goal, as it struggles to keep a lid on research and development costs. (Reporting by Gilles Gillaume; Writing by Christian Lowe; Editing by Catherine Evans)