JAPANESE car maker Nissan has reported a sharp drop in profits, blaming weak demand in Europe, China and the US.

Net profit fell to £371m in the October to December period, down 35 per cent from a year earlier. Sales in its biggest market, China, slumped 31.3 per cent.

The company has left its annual net profit forecast unchanged, bucking the trend among its Japanese rivals who have made more optimistic predictions as a result of the yen's depreciation.

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Nissan's sales in China have been damaged by a territorial dispute between Japan and China which has hit sales of Japanese products. Meanwhile the downturn across Europe has had a negative impact on car sales.

"Nissan's performance in the third quarter did not meet our expectations," said chief executive Carlos Ghosn.

"This was primarily the result of difficult operating conditions in Europe for the entire auto industry, in China for Japanese automakers, and in the US for Nissan," he added.

Despite the cautious outlook the manufacturer's plant in Sunderland is continuing to invest in new plant and recruit additional workers ahead of production starting on several new models, including the Leaf electric hatchback.