* Fiat cuts 2013, 2014 sales, profit targets
* Q3 trading profit at 951 mln euros, above forecasts
* Sees weak European market through 2014
* Q3 net debt at 6.7 bln euros, higher than expected
MILAN, Oct 30 (Reuters) - Fiat cut its group targets for 2013 and 2014 on Tuesday, saying that as sales languish in austerity-hit Europe trading profit in 2014 may be a third lower than a target it set a couple of years ago.
Revising projections made in 2010, when European economies seemed ready to recover from the global financial crisis, the Italian automaker said it now expected to sell 4.6-4.8 million cars in 2014, not the 6 million it had hoped for.
It cut its 2014 revenue target to 94-98 billion euros from a previous forecast of 104 billion and also sees higher debt.
The maker of the mass-selling Punto and Fiat 500 supermini, as well as marques including Chrysler, Alfa Romeo and Ferrari, said it expected to post a trading loss of 700 million euros in Europe this year and break even in the region only in 2015-16.
``Events of the past 12 months have reinforced our negative view of the development of the European markets,'' the Turin-based manufacturer said in a statement.
Shares in Fiat accelerated losses on the back of the profit warning and closed down 4.7 percent in Milan at 3.93 euros.
``The share is being buffeted by the lowered targets. Though honestly it's all just a natural consequence of the unfolding crisis on the European markets,'' said an Italian fund manager, who spoke on condition of anonymity. ``Thank God there's Chrysler. Fiat without Chrysler would be in real trouble.''
Under the leadership of Chief Executive Sergio Marchionne, Fiat took control of a bankrupt Chrysler in 2009. The successful revamp of the U.S. carmaker has so far let Fiat keep all its Italian plants open, though they are running below capacity.
Earlier in the day, Fiat had posted third-quarter trading profit above analysts' forecasts as a jump in sales at Chrysler offset a growing loss in Europe, where the carmaker sees no recovery until 2014.
Fiat reported a trading profit of 951 million euros against market expectations of 910 million euros and increased its debt target for the year to 6.5 billion euros, a billion higher than its original goal.
The carmaker, under political pressure to resume a multi-billion euro investment plan for its five Italian plants, gave no detail on when such spending may restart.
The trading loss in Europe, where Fiat sells 25 percent of its cars, was 238 million euros, double the level of a year ago.
Fiat's bearish outlook hammers home the dramatic business conditions facing Europe's carmakers as they struggle to stem losses from high fixed costs in a shrinking market.
Last week, U.S. rival Ford said it would shut plants in Belgium and Britain, with the loss of thousands of jobs.
France's PSA Peugeot Citroen has accepted state aid and even Germany's Volkswagen, previously more crisis-proof than its mass-market rivals, posted a big quarterly profit drop.
``The issue in the auto sector right now is who can survive a repeat of 2008,'' said Philippe Houchois, referring to the car market contraction that forced governments in Europe and the United States to step in with emergency cash injections.
Europe's sovereign debt crisis, government spending cuts and high unemployment have hit consumer budgets and sent demand plunging, with new car registrations in the region showing their sharpest contraction in 12 months in September.
Fiat's bottom line continues to be bolstered by Chrysler, which posted an 80 percent rise in quarterly net income on Monday, as well as by strong results in Brazil.
But in Italy, total car sales have declined to levels not seen since the 1970s and Fiat has responded by cutting back on spending - a strategy that has drawn criticism from trades unions, politicians and even some other business leaders.
Among cost savings, Fiat is holding back on replacing the Punto compact until 2015 - taking a risk that it may have no new model to push in showrooms should the market recover sooner.