* Nintendo to report July-Sept earnings on Thursday
* Forex losses of 40 bln yen expected -Nikkei
* First half net loss also likely larger than forecast -Nikkei
* Company projects full-year operating profit of 35 bln yen (Adds details,)
TOKYO, Oct 26 (Reuters) - Nintendo Co is expected to post a recurring loss of about 100 billion yen ($1.32 billion) in the first half ending on Sept. 30, much worse than the 55 billion loss the company has forecast, the Nikkei business daily said on Wednesday.
Shares of the Japanese games maker tumbled as much as 7.5 percent after the news, to 10,800 yen.
Nintendo, which dominated the games industry for years with its DS handheld game machines and Wii home consoles, has struggled to win popularity for its new generation 3DS gadget, as casual gamers turn to smartphones and tablets from Apple Inc and others.
Nintendo, like many Japanese firms, is also facing a massive hit from the strong yen.
The Nikkei said in its online edition the company had incurred 40 billion yen in foreign exchange losses, mostly against the euro , and would likely also post a first half net loss greater than the 35 billion yen it has projected.
A spokesman for Nintendo declined to comment on the report. The company is due to announce its July-September earnings on Thursday.
Nintendo, which makes 80 percent of its sales overseas, is facing a slump in the value of its cash deposits and accounts receivable in foreign currencies as the yen rises, the Nikkei said.
The games giant behind the Super Mario franchise slashed its full-year operating profit forecast in July to a 27-year low of 35 billion yen, as it cut the price of the 3DS by about one-third to try to boost weak sales. ($1 = 75.770 Japanese Yen) (Reporting by Chang-Ran Kim and Isabel Reynolds; Editing by Joseph Radford and Edmund Klamann)