The world's biggest food group Nestle raised its full-year outlook after strong demand for its Maggi and Nescafe brands in emerging markets helped it post a forecast-beating 7.5 percent rise in underlying first-half sales.

The Vevey-based maker of KitKat chocolate bars and Nespresso portioned coffee said it expected underlying sales to grow at the top end of its long-term target range of 5-6 percent and to achieve higher margins in constant currencies in 2011.

Nestle continued to make good progress in a period characterized by political and economic instability, natural disasters, rising raw material prices and, yes, a strong Swiss franc, Chief Executive Paul Bulcke said in a statement.

Price increases helped Nestle to partly offset soaring costs for raw materials such as coffee, cocoa and sugar, which peaked earlier this year.

The company said it decided not to launch a new share buyback program, which had been expected by many analysts, partly due to the tough economic environment and also to keep cash available for possible bolt-on acquisitions.

A stronger than expected set of figures driven by pricing and ongoing strong results in Asia -- I expect the stock to react positively. However, the company's decision not to launch a new buyback may be seen as disappointing, Kepler Capital Markets analyst Jon Cox said.

Price increases helped rivals Kraft Foods and Unilever post better than expected second-quarter results last week. At yoghurt maker Danone , however, they led to lower dairy sales volumes.

(Reporting by Silke Koltrowitz; Editing by Mike Nesbit)

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