Nissan on Tuesday slashed its full-year profit forecast by 20 percent as it pointed to the effect of a strong yen, weakness in Europe and slumping sales in China over a bitter territorial row.

Japan's second-biggest automaker now tips net profit for the year to March of 320 billion yen ($3.99 billion), down from its earlier estimate of 400 billion yen.

It also said first-half profit slipped 2.8 percent to 178.3 billion yen on sales of 4.54 trillion yen, which were up 4.1 percent.

"After factoring in the projected negative impact of a strong yen, disruption in China and continuing weak market conditions in Europe, Nissan has revised downward its full-year forecast," the company said in a statement.

Nissan also cut its full-year sales forecast for China by 13 percent as the diplomatic spat between Tokyo and Beijing sparked a Chinese consumer boycott of Japanese goods.

Nissan, part-owned by France's Renault, said it now expects to sell about 1.18 million vehicles in China, the world's largest vehicle market, in the year to March, down from a previous forecast of 1.35 million.

Japan's automakers have seen a steep drop in sales in China in recent weeks, with Honda blaming the ongoing row for a 20 percent cut to its annual profit forecast.

The row stems from Tokyo's nationalisation in mid-September of an East China Sea island chain that is also claimed by Beijing.