The world's biggest food group Nestle on Thursday raised its sales growth outlook for the year after price hikes and strong demand in emerging markets helped its underlying sales rise more than expected in the first nine months of 2011.

Underlying sales at the maker of KitKat chocolate bars, Nespresso coffee capsules and Maggi soups rose 7.3 percent, down from 7.5 percent in the first half, but beating forecasts for a 7.1 percent rise in a Reuters poll.

For the year as a whole, in spite of input cost pressures, we expect to slightly over-perform against our long-term organic growth range of 5-6 percent and continue to strive for a margin improvement in constant currencies, Chief Executive Paul Bulcke said in a statement.

Europe's big food groups have so far been able to compensate deteriorating consumer sentiment in mature markets thanks to buoyant demand in emerging markets, and margins are set to benefit from price hikes and easing commodity cost pressures.

Nestle achieved volume growth of 4.1 percent and raised prices by 3.2 percent between January and September. It said in a presentation the underlying sales growth contribution was more weighted to pricing as the year progressed.

Very solid set of figures with a clear beat of consensus at the organic growth and raises its guidance, Kepler Capital Markets analyst Jon Cox said.

But Cox noted that Nestle had tweaked its margin outlook comment to say it is striving for an increase in constant currencies. That may raise some eyebrows, he said.

While Asia remained the growth driver with 11.7 percent underlying sales growth, Nestle spoke of a challenging environment especially in developed markets.

Vontobel's Jean-Philippe Bertschy noted the slowdown in Europe in the third quarter to 3.4 percent underlying sales growth from 7.7 percent in the second quarter.

Waters was particularly hit due to unfavorable weather in Europe with a flat volume growth in the third quarter, he said.

French yoghurt maker Danone on Tuesday reported better than expected third-quarter underlying sales growth and gave a confident outlook for 2012, citing softening commodity prices and robust growth in emerging markets.

Nestle shares, which have lost about 6 percent so far this year, compared with a 3.6 percent drop in the STOXX 600 Europe food & beverages index, trade at about 15.9 times estimated 2012 earnings, at a premium to Danone on 14.4 and Unilever on 14.1.

(Editing by David Cowell and Hans-Juergen Peters)

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