* Mazda, Mitsubishi Motors, Denso lower forecasts
* Volkswagen, Continental, MAN reaffirm 2008 profit targets
* Mazda CEO says sees no change in relationship with Ford
* Shares gain amid global equity rally
(Combines Japanese and German automotive earnings)
By Chang-Ran Kim and Christiaan Hetzner
TOKYO/FRANKFURT, Oct 30 (Reuters) - Slowing global car markets and a strong yen forced Japanese carmakers Mazda and Mitsubishi to slash full-year targets on Thursday while German rival Volkswagen stuck to its guidance despite the global financial crisis.
"I see the current situation as an historic financial crisis," Mitsubishi Motors President Osamu Masuko said at a news conference in Tokyo.
Mazda surprised with a sharp cut in its earnings forecast after quarterly operating profit fell by a fifth. Mitsubishi also lowered expectations despite a 21 percent profit gain helped by lower costs.
Volkswagen, the third-largest carmaker after Toyota and GM, reaffirmed that 2008 operating profit would see growth with just one quarter left to go, after currency hedging gains offset shrinking gross margins to give a hefty boost to earnings in the three months to September 30.
VW's automotive net liquidity at the end of September dropped 15 percent as higher investments forced the company to burn through its cash in the third quarter, a 4.36 billion-euro negative swing in net cash flow versus the year earlier.
Volkswagen just began the roll-out of its most important model, the VW Golf, which Chief Executive Martin Winterkorn hopes will lift group sales in 2009 as well, but he has already warned next year would be "critical".
Chief Executive Karl-Thomas Neumann of German auto parts supplier Continental said he had witnessed a steep slowdown in all markets in the past quarter: "This trend will probably become even stronger, continuing far into 2009."
Amid broader market strength, shares in European and Japanese auto stocks rallied as investors cheered a Federal Reserve interest rate cut and likely further easing in monetary policy.
Mazda, of which Ford owns a third, had been expected to overshoot its projections until it revealed on Thursday results described as "awful" by Credit Suisse and shaved 75,000 vehicles off of its sales target.
CEO Hisakazu Imaki declined to confirm or deny reports Ford is looking to unload the bulk of its stake in the Japanese carmaker to raise cash, saying only that he expected no change in the long-time partners' relationship.
"Mazda and Ford are so close that it's hard to tell where one starts and the other ends," Imaki said.
Rival Mitsubishi complained of falling sales in mature U.S. and European markets as it lowered expectations for its global volumes by 6 percent and said it was bracing itself for narrowing growth in Russia.
Honda has predicted bigger falls in profits this year amid rapid appreciation in the yen versus both the dollar and euro, while Nissan reports on Friday and Toyota on Nov. 6.
NO ONE SPARED
Truckmaker MAN Commercial Vehicles, the core business of industrial conglomerate MAN, lowered its margin outlook as new bookings plummeted but it still expected a healthy operating return on sales of just below 11 percent.
"While we expected a slowdown in demand, it proved to be faster and sharper than we had forecast at the beginning of the year." said Hakan Samuelsson, CEO of parent MAN.
Due to the "considerable uncertainty" among truck customers, Samuelsson said he would significantly reduce MAN's nearly 3,390 temporary staff that represented over 6 percent of its workforce.
A day earlier, Toyota's truck subsidiary Hino Motors Ltd reduced its operating profit forecast by two-thirds, blaming a drop in production of vehicles and parts for Toyota in North America.
Germany's Continental stuck to its recently reduced guidance for a 2008 adjusted EBIT margin of around 8.5 percent amid a worsening sales outlook largely priced into the stock, and announced a fresh round of cost cuts.
"In the Automotive Group we will reduce the number of temporary workers, greatly lengthen the plant holiday shutdown period at the end of the year by using the existing work time accounts," Neumann said in a statement.
"Furthermore, we are putting investments that are not urgent on hold," he said.
Toyota's rare setbacks in the United States, centring on shrinking demand for large, gas-guzzling vehicles like its Tundra full-size pickup, also hit its top supplier, Denso Corp, which lowered its profit forecasts for the year to next March 31.
(Editing by Jason Neely)