UPDATE 2-Honda cuts FY profit forecast as China backlash hits

* Cuts FY profit fcast by 20 pct to 375 bln yen

* Q2 profit jumps to 82.2 bln yen, below mkt fcast

* Impact from China protests may run into Q3, Q4

* Honda shares drop nearly 6 pct; results released early inadvertently

TOKYO, Oct 29 (Reuters) - Japan's Honda Motor Co cut its full-year net profit forecast by a fifth after sales in China, the world's biggest autos market, were hit by a popular backlash against Japanese products in a dispute over East China Sea islands.

The substantial cut makes it likely that rivals Toyota Motor and Nissan Motor will follow suit when they report quarterly earnings early next week.

``It's likely Toyota and Nissan are going to cut forecasts in the same way. A cut was to be expected because the problems with China weren't factored into forecasts,'' said Fujio Ando, managing director at Chibagin Asset Management.

Demand for Honda, Toyota and Nissan cars slumped in China amid violent protests in September over the territorial dispute, with South Korea's Hyundai Motor and Germany's BMW picking up market share.

Sales by Honda and its China joint ventures dropped 40.5 percent last month. China is Honda's second-biggest market after the United States, accounting for 17 percent of 2011 sales.

Honda, whose models include the Accord, Fit/Jazz, Civic and CR/V, cut its net profit forecast for the year to March to 375 billion yen ($4.7 billion) from its earlier estimate of 470 billion yen. Last year, Honda reported net profit of 211.4 billion yen.

Shares in Honda - which fell 15 percent to near 9-month lows amid the China protests - dropped nearly 6 percent on Monday, trading at 2,383 yen early in the afternoon session.

Honda released its quarterly earnings three hours earlier than planned, after accidentally posting the results on its website. It quickly took down the numbers, but was told by the Tokyo Stock Exchange to bring forward the full announcement.

Net profit for July-September rose 36.1 percent to 82.2 billion yen ($1.03 billion), some way below the average estimate of 107.2 billion yen from six analysts polled by Thomson Reuters I/B/E/S. A year ago, Japanese manufacturers were still reeling from the March earthquake and tsunami.

Honda's quarterly profits were also dented by start-up and advertising costs for the new Accord sedan, which went on sale in the United States in September, but the refresh helped Japan's third-biggest automaker increase its share of the U.S. car and light truck market to 8.7 percent in September.

The fallout from the Japan/China dispute could run into the current and fourth quarters, analysts have warned.

CEO Takanobu Ito, 59, a former aerospace engineer who took over three years ago, has set a demanding goal to nearly double global car sales to 6 million in four years. Worldwide production jumped 69 percent in April-September to above 2 million vehicles, but the carmaker on Monday scrapped its full-year global sales forecast of 4.3 million vehicles amid the uncertainties in the Chinese market.

Toyota and Nissan report their quarterly earnings on Nov. 5 and Nov. 6, respectively.