* Toyota sees FY op loss Y20 bln vs Y38 bln consensus loss
* Q3 op profit Y189 bln yen vs Y99 bln consensus
* Sees $2 bln hit in costs, lost sales to March from recall
* Toyota shares sink, hit 10-mth low in Tokyo
(Adds UK, Germany recall breakdown, UK car sales)
By Chang-Ran Kim and John Crawley
TOKYO/WASHINGTON, Feb 4 (Reuters) - Toyota Motor Corp (7203.T) expects costs and lost sales from its massive safety recall to total $2 billion by the end of March, keeping it in the red for the year despite its strongest profit in six quarters.
The recall of more than 8 million vehicles due to problems with unintended acceleration has wiped $30 billion from Toyota's share value, hurt its reputation and overshadowed what until was expected to be an upbeat story of improving earnings.
The world's biggest automaker on Thursday announced that 216,000 cars in Germany, Europe's biggest car market, and 180,000 in the UK were included in the recall to fix an accelerator pedal problem.
In the UK, new car sales rose 29.8 percent in January but Toyota's market share for the month fell to 5.05 percent from 7.46 percent in the same month last year. [ID:nLDE6130ZH]
"Toyota's recall this time is unlike any other in auto industry history," said Lee Sung-Jae, an analyst at Kiwoom Securities in Seoul. "The scale is huge to begin with, and this deals a fatal blow to the very core value Toyota represented -- that is the quality of its cars."
Automakers hit by a huge turndown received a boost in the latter part of 2009, thanks largely to government incentives and improving access to credit as the global economy recovered.
Toyota was a major beneficiary of the U.S. cash-for-clunkers scheme, resulting in its best quarterly operating profit since early 2008 in the three months to December.
But the world's largest automaker is now under investigation for its handling of the recall of some of its most popular models including the Camry, Corolla and Rav4.
Up to 19 U.S. crash deaths over the past decade may be linked to accelerator-related problems at Toyota, congressional officials have said.
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With less than two months left in the current financial year, Toyota slashed what most analysts considered an excessively conservative operating loss forecast to 20 billion yen ($220 million) from 350 billion yen.
A Toyota official said the new forecasts for the current year took into account up to $2 billion lost from the recall -- an estimated 100 billion yen in costs and a further 70-80 billion yen in lost sales, in line with analysts estimates.
Senior Managing Director Takahiko Ijichi said the company was unsure about the impact beyond the end of this financial year, but investors expressed their concerns.
"The company's forecast earnings and profitability will surely decrease because of the recall," said Benedicte Mougeot, fund manager of HSBC's GIF Japanese equity fund in Hong Kong. "Taking into account the increased risk and reduced profitability, we will review our investment."
Shares in Toyota have lost as much as 23 percent in the last two weeks and slid 3.5 percent to a 10-month closing low of 3,280 yen on Thursday. More than 56 million shares were traded, the most in at least a quarter of a century.
Toyota's new forecast for the year to March compares with a 38 billion yen annual loss forecast in a survey of 19 brokerages by Thomson Reuters I/B/E/S.
Toyota posted October-December operating profit of 189 billion yen, easily beating a 99 billion yen estimated by Thomson Reuters I/B/E/S. Its nine-month operating profit of 52 billion yen implies a 72 billion yen loss in Q4.
Investors have now turned their focus on how deep the damage will go, with Toyota's sales in its most important U.S. market already falling 16 percent in January -- enough to knock it to third place, below Ford Motor Co (F.N).
"I am in no way certain that Toyota's explanation for the cause of incidents of sudden acceleration in its vehicles satisfies me," John Dingell, a Michigan Democrat and longtime ally of the U.S. auto industry, said on Wednesday.
The developments underscored the increasingly political overtones of a safety crisis that has hit Toyota sales and rocked its reputation for quality.
Toyota engineers investigating dozens of complaints about inadequate braking on its new Prius hybrid said they had fixed a software problem related to its anti-lock braking system.
"This issue shows that we may have fallen short of the standards expected of us by our customers," Hiroyuki Yokoyama said, declining to say whether an official recall was planned. (Additional reporting by Bernie Woodall, Kevin Krolicki, Parvathy Ullatil, Jungyoun Park, Shin Ji-eun, Helen Massy-Beresford, Keith Weir, David Milliken and Michael Shields; Writing by Lincoln Feast; Editing by Jean Yoon and David Cowell)