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Once viewed as a maker of cheap cars with a poor quality record, Hyundai has been a stellar performer even during the global financial crisis, steadily increasing its global market share and nearly doubling its share price to a record high last month.

Its ability to sustain strong growth, however, will be put to the test in the coming months as Hyundai faces a strengthening won, rising competition and uneven global economic recovery. Its Japanese rivals are also quickly recovering to boost their production back to pre-earthquake levels.

"Solid growth will continue in the second half but it may lose some momentum as its Japanese rivals are recovering fast and that will provide a more level playing field for Hyundai, which has benefited from its rivals' struggle in the first half," said Ko Seung-jae, a fund manager at Dream Asset in Seoul.

"It's shares are unlikely to fall from the current level but don't have much upside potential either, given the balance of risk factors," he said.

Shares in Hyundai Motor have jumped 40 percent this year, outperforming the wider market's 6 percent gain. The stock fell 1.65 percent after the results, versus a 0.85 percent drop in the KOSPI.

The stock has risen 10-fold in the past 10 years.

STRONGEST CHALLENGER

Hyundai has emerged as the strongest challenger to Japanese automakers, aided by improved product quality, a previously cheaper won, affordable prices and savvy marketing strategies.

The firm, the world's fifth-largest auto maker along with affiliate Kia Motors, on Thursday reported a 2.3 trillion won ($2.2 billion) net profit for the April to June quarter, compared with a consensus forecast of 2.1 trillion won from Thomson Reuters I/B/E/S.

That was up from a 1.7 trillion won net profit a year ago and from 1.9 trillion won in the first quarter, helped by record vehicle sales.

Hyundai said its global car sales rose 13 percent to a record 1.03 million vehicles in the second quarter from a year earlier.

Hyundai warned on Thursday a strengthening won, fiscal problems in Europe and new model launches by its rivals are major threats for its growth in the second half of this year.

"Overall, the global automaker environment will not be easy in the second half," Lee Won-hee, chief financial officer of Hyundai told analysts, after the results were announced. "We expect Japanese carmakers to adopt a strategy to aggressively expand market share in the United States and other markets."

Nissan Motor Co on Wednesday reported a smaller-than-expected 10.4 percent fall in quarterly operating profit as it recovered from a parts shortage that hammered the industry after the March 11 earthquake in Japan.

The won is among the best performing emerging-market currencies so far this year, up 8 percent against the dollar, and investors are betting the currency has more room to gain in the coming months.

From this year, Hyundai has been reporting earnings on a consolidated basis to reflect the earnings of its affiliates, including financial operations, under new accounting rules.

Hyundai's U.S. market share jumped to 5.5 percent in the second quarter from 4.7 percent a year earlier, driven by strong sales of its Sonata sedan and Elantra compact, while its Japanese rivals suffered from production disruptions.

Those steady gains led Hyundai to raise its U.S. sales target for this year by 6 percent to 624,000 vehicles.

Hyundai also gained traction in its home market, helped by brisk sales of its new Grandeur sedan.

($1 = 1,050.00 Korean Won)

(Additional reporting by Miyoung Kim, Ju-min Park and Tae-yi Kim; Editing by Matt Driskill and Jonathan Hopfner)

Visa Chief Executive Joseph Saunders, in a conference call with analysts, said the payment processor would introduce a network participation fee in the United States for all of its debit, credit and prepaid card services.

As part of the new policy, Visa also will lower the variable rate charged for transactions.

Visa's shift away from per-transaction fees is a large departure for the San Francisco-based company. It is being done in advance of new fee caps that take effect later this year as part of the 2010 Dodd-Frank financial reform law.

Saunders did not disclose what the participation fee will be, but said it will be based on a merchant's size, and the merchants' number of locations. He also said the new fees did not rule out future price changes.

Due to the overhaul and the new fee caps imposed by Dodd-Frank, Saunders said 2012 will be a "low point" for debit card processing fees.

"We won't do as well as we have," he said.

The new program comes as Visa reported better-than-expected fiscal third quarter results, and plans to buy back an additional $1 billion in shares over the next year.

For Visa, the quarterly results highlight consumers' increasing reliance on debit and credit cards rather than cash or checks to make everyday purchases.

"They're getting better results as consumers are shifting from paper to plastic," said Shannon Stemm, a financial services analyst with Edward Jones.

Analysts said the company's continued profits drove the new share buyback program, following a similar $1 billion share buyback announced in April and completed in the fiscal third quarter.

RESULTS

Visa on Wednesday reported fiscal third-quarter net income of $1 billion, or $1.43 per Class A common share, up from $716 million, or 97 cents per share, a year ago.

Excluding the one-time, noncash gain on its Visa Europe put option, Visa earned $883 million, or $1.26 per share.

Analysts estimated Visa would report net income of $1.23 per share, according to Thomson Reuters I/B/E/S.

Total operating revenue increased 14 percent to $2.3 billion from a year ago.

Total payment volumes increased 17 percent to $941 billion from $802 billion.

Visa's international business is becoming a larger portion of its quarterly results. Payments outside the U.S. -- $422 billion -- accounted for 44 percent of Visa's third quarter volume, up from 41 percent a year ago, when such payments totaled $333 billion.

Visa shares closed down 1.6 percent, or $1.45, at $87.75 on the New York Stock Exchange before results were announced.

(Reporting by Joe Rauch; Editing by Steve Orlofsky, Phil Berlowitz and Carol Bishopric)

The Commerce Department said on Wednesday durable goods orders dropped 2.1 percent, weighed down by weak receipts for transportation equipment, after a 1.9 percent increase in May.

Excluding transportation, orders edged up 0.1 percent after gaining 0.7 percent in May.

Durable goods are items ranging from toasters to aircraft that are meant to last three years or more.

Economists had expected overall orders to rise 0.3 percent.

"It is indicative of the lingering effects of this soft patch that we've had here recently where businesses remain very cautious with regard to building any kind of stocks in anticipation of increasing final sales," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Treasuries prices pared earlier losses on the data, while the dollar extended losses against the yen.

Durable goods orders are a leading indicator of manufacturing. Though orders tend to be volatile, last month's unexpected decline could add to fears of a slowdown in factory activity.

Manufacturing has been the bright spot in the economy, whose recovery has faltered since the start of the year.

Data on Friday is expected to show the economy grow at a 1.8 percent annual rate in the second quarter, according to a Reuters survey, after expanding 1.9 percent in the January-March period.

Orders last month were pulled down by an 8.5 percent drop in orders for transportation equipment. That reflected a 28.9 percent plunge in aircraft orders.

Boeing received 48 aircraft orders, up from 27 in May, according to information posted on the plane maker's website. However, the bulk of the orders were for its less expensive models.

Motor vehicle orders dropped 1.4 percent as manufacturers continue to deal with disruptions to production following the earthquake in Japan. Motor vehicle orders rose 0.3 percent in May.

Outside of transportation, orders for machinery fell 2.3 percent, while primary metals rose 1.0 percent. Capital goods orders fell 4.1 percent, while computers and electronic products edged up.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, slipped 0.4 percent last month after a revised 1.7 percent rise in May.

Economists had expected a 0.8 percent gain from a previously reported 1.6 percent increase.

Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, rose 1.0 percent after increasing 1.7 percent in May.

A separate report showed demand for loans to purchase houses fell for a third straight week to the lowest since late February, suggesting home sales will remain weak.

The Mortgage Bankers Association said its mortgage purchase index fell 3.8 percent last week.

(Reporting by Lucia Mutikani, Editing by Andrea Ricci)