* Q1 op profit 11.6 bln yen vs consensus loss f'cast 117 bln
* Full-year op forecast for 100 bln yen loss unchanged
* China a bright spot but downbeat on global demand recovery
* Stock nearly doubles this yr vs 44 pct rise in sector index
* http://graphics.thomsonreuters.com/079/JP_NSQ20709.jpg
TOKYO, July 29 (Reuters) - Nissan Motor Co posted an 86 percent fall in quarterly operating profit, hit by a stronger yen and declining sales, but avoided the loss analysts had expected by cutting costs aggressively.
Predicting no convincing recovery in global car demand, Japan's No.3 automaker kept its forecasts for an annual loss unchanged as a lack of hybrid cars overshadowed solid sales in China.
Chief Executive Carlos Ghosn has previously said Nissan will focus on returning to positive free cash flow through joint cost-cutting efforts with French partner Renault SA.
While some bright signs are emerging on the sales front -- Nissan has enjoyed stellar growth in China this year thanks to a line-up heavy in smaller cars that enjoy tax incentives -- its lack of hybrid models has left it trailing the market in Japan.
For the first time, Nissan, Japan's No.3 automaker, sold more vehicles in China than at home in the first half of the year.
Nissan made an operating profit of 11.6 billion yen ($122.9 million) in April-June, down from a profit of 80 billion yen a year earlier but beating a consensus loss estimate of 117 billion yen in a poll of four analysts by Thomson Reuters.
Nissan, held 44 percent by France's Renault SA, lost a net 16.5 billion yen in the first quarter, against a profit of 52.8 billion yen a year ago.
Revenue fell 36 percent to 1.51 trillion yen.
For the financial year to March 31, 2010, Nissan kept its operating loss forecast at 100 billion yen and its net loss forecast at 170 billion yen.
Larger rival Honda Motor Co also surprised analysts by posting a first-quarter profit on Wednesday, and raised its annual profit forecast.
"We believe it would be premature to lift forecasts at this juncture," Nissan Chief Operating Officer Toshiyuki Shiga said, listing among the risks a further rise in the yen and drops to global car sales when government steps to stimulate demand come to an end.
Shiga said Nissan was on track to return to positive free cash flow by the end of the financial year.
As Honda and top ranked Toyota Motor Corp aim to spur car sales with new hybrid vehicles, Nissan is pouring its efforts into creating a market for pure electric vehicles with the first launches in Japan and the United States next year.
Partly on hopes for its lead in electric vehicles, shares in Nissan have almost doubled in price this year, making them the best performer among Japanese auto shares. Tokyo's transport sub-index gained 44 percent in the same period.
Before the results were announced, Nissan ended up 0.8 percent, while the transport sector gained 0.3 percent. (Reporting by Chang-Ran Kim; Editing by Lincoln Feast)