UPDATE 2-Apple to host Oct 23 event, iPad mini expected-source

* Smaller tablet would be new segment for Apple

* 7-8 inch screen, seen to compete with Kindle, Nexus

(Recasts with source's confirmation of event, details on the iPad mini)

SAN FRANCISCO, Oct 12 (Reuters) - Apple Inc will host an event on Oct. 23, said a source familiar with the plan, in what is expected to be the unveiling of a smaller iPad to venture into a market staked out well in advance by rivals Amazon.com Inc and Google Inc .

Speculation has swirled for months that Apple was planning a smaller, less expensive version of its popular iPad to take on cheaper competing devices, a move that analysts say may hurt its margins but prevent its arch-rivals from dominating an increasingly important computing segment.

The consumer device giant is gearing up to unveil a new product at a major Oct. 23 event, said the source who declined to be named, days before Microsoft Corp unveils Windows 8 and its new Surface tablet on Oct. 26. The source did not specify what the product would be.

An Apple spokesman declined to comment.

The device, which many expect will sport a screen between 7 and 8 inches (18-20 cm), is deemed by analysts to be the iPhone makers' attempt to finally get into the fast-growing market.

A smaller iPad will directly compete with e-commerce giant Amazon's Kindle Fire HD tablet and Google's Nexus 7, both of which have 7-inch screens and are priced at $199. The first Kindle Fire, launched last year, went on to grab about a fifth of the U.S. tablet market.

Apple shares were up 0.6 percent at $631.63 at midday.

The news of the event was earlier reported by tech blog AllThingsD.

(Reporting By Poornima Gupta and Jennifer Saba; Editing by Gerald E. McCormick and Marguerita Choy)

((jennifer.saba@thomsonreuters.com)(1 646 223-6173)(Reuters Messaging: jennifer.saba.reuters.com@reuters.com))