* Toyota Q1 op loss 194.9 bln yen vs 326 bln loss f'cast

* BMW Q2 EBIT 169 mln vs 42 mln f'cast

* Toyota ups outlook; both cos say demand visibility low

* BMW shares down 3 pct

* German July car sales up 29.5 pct - KBA (Adds German car sales, analyst, CDS, updates shares)

Leading global automakers reported forecast-beating quarterly results on Tuesday, but continued to give cautious outlooks for the industry, which remains hard hit by weak demand and a lack of consumer credit.

Toyota Motor Corp (7203.T), the world's biggest automaker by sales, beat targets with an operating loss of 194.9 billion yen ($2.05 billion) in the April-June quarter, and lifted an earlier cautious outlook, but luxury carmaker BMW (BMWG.DE) said markets were too volatile to make a full-year forecast.

BMW's said that despite some encouraging signals such as an end to deteriorating resale values in the U.S. and UK, a lasting and wide-ranging recovery is not yet in sight, sending BMW shares lower in early afternoon trade.

BMW shares were trading 2.9 percent lower at 31.97 euros in early afternoon trading, below the DJ Stoxx European Auto index which was 1.1 percent lower.

The Munich-based car maker's assessment for the rest of the year was much more downbeat than rival Daimler (DAIGn.DE) which last week said it expects a gradual improvement in the group's operating profitability in the course of 2009.

Furthermore BMW said the benefits of the scrapping incentive scheme in Germany, which helped boost German July car sales 29.5 percent, hadn't benefited the premium segment.

Toyota, maker of the popular Prius hybrid car, posted its third consecutive quarterly loss, but upped its targets for the full year, thanks to deeper cost cuts and government measures to jump-start automotive demand worldwide. [ID:nT172427]

For the year to end-March 2010, Toyota forecast an operating loss of 750 billion yen and a net loss of 450 billion yen, better than its forecasts three months ago for losses of 850 billion yen and 550 billion yen, respectively. [ID:nT176848]

However, an executive said it was difficult for the group to gauge demand for vehicles outside Japan.

Demand is being supported to a large extent by government schemes, and it's difficult to get a read on how much this will translate into a fundamental recovery in demand, Senior Managing Director Takahiko Ijichi told a news conference. [ID:nTKG006448] Toyota raised its forecasts for global vehicle sales by 100,000 vehicles to 6.6 million, solely on the back of expected sales in Japan, where it has benefited from incentives and tax breaks on more fuel-efficient vehicles.

BMW, which published earnings before interest and taxes (EBIT) of 169 million euros ($243.2 million) for the first quarter, compared with a Reuters poll average of 42 million euros, as cost-cutting measures took effect, said it could not give a forecast for 2009 earnings due to the highly volatile state of the markets and uncertainty with regard to future economic developments. [ID:nL4222397] The German manufacturer of the Mini, Rolls Royce and BMW brands said it saw the downward trend of deliveries to customers seen in the first six months ending, but added it did not expect to reach the sales volume level of 1.4 million vehicles seen in 2008.

BMW cash flow benefited again from inventory reduction, said DZ Bank analyst Michael Punzet in a research note, but we don't believe that this trend will continue in H2 2009.

In the European CDS market, five-year credit default swaps on BMW tightened by 7.5 basis points to 132 basis points, Markit data showed, after the quarterly publication. [ID:nL4423515]

Other automakers' swaps also benefited from Toyota's forecast-beating results and data released on Monday that showed government scrapping incentive schemes boosted sales last month in France, Italy, Spain and the United States. [ID:nL4532327] [ID:nL3678947]

Volkswagen (VOWG.DE) five-year CDS were 11 basis points tighter at 136 basis points, Markit data showed.

In Germany, Europe's biggest auto market, which has been strongly supported in recent months by a scrapping scheme to encourage drivers to trade in old cars, German motor vehicles' agency KBA said new car registrations were up 29.5 percent in July. [ID:nL42384]

For an INSTANT VIEW on Toyota's quarterly results, click on [ID:nT69217]

For a FACTBOX showing the ranking of the world's top 10 automakers by sales, click on [ID:nT43743] (Reporting by Chang-Ran Kim, Edward Taylor and Michael Shields; Additional Reporting by Natalie Harrison; Writing by Helen Massy-Beresford; editing by Simon Jessop and Rupert Winchester)