TOKYO (AFP) - Toyota Motor Corp. is likely to report a smaller-than-expected operating loss in the six months to September thanks to recovering sales and a weaker yen, a report said Thursday.

The world's biggest automaker is expected to report a group operating loss of 250 billion yen (2.7 billion dollars) for the April-September first half of the financial year, the Nikkei daily said.

The loss would be much smaller than an earlier projected loss of 400 billion yen although it compares with a year-before profit of 582 billion yen.

Overall sales for the fiscal first half are estimated at 8.3 trillion yen, down 32 percent from a year earlier but up by 500 billion yen from the company's earlier projection, the Nikkei said without naming its sources.

The report did not mention possible earnings on a net basis.

The Nikkei noted Toyota's Prius hybrid car was selling well in Japan on the government's tax breaks for environmentally friendly vehicles.

Sales of new vehicles also grew in China and other Asian countries while they fell 20-30 percent in North America and Europe, it said.

The weaker-than-expected yen also helped improve Toyota's earnings, it added.

Toyota, which is to release half-year results next week, declined to comment on the report. It has forecast a full-year operating loss of 750 billion yen and a net loss of 450 billion yen.

Honda Motor, Japan's number two automaker, on Tuesday raised its net profit forecast for the full year to March almost threefold on the back of cost cuts and government subsidies for fuel-efficient cars.