UPDATE 2-Carrefour Q2 sales top forecasts, expands in China

* Q2 sales 24.92 bln euros vs forecast avg 24.79 bln

* Q2 sales down 1.1 pct like-for-like, excluding petrol

* Sees 2010 underlying operating profit around 3.1 bln euros

* To buy 51 pct stake in China's Baolongcang

(Adds more detail, background)

By Dominique Vidalon

PARIS, July 15 (Reuters) - Carrefour (CARR.PA), Europe's biggest retailer, just beat forecasts with a 6.3 percent rise in second-quarter sales, boosted by emerging markets where it extended its reach with a hypermarket partnership deal in China.

The French group, which has over 15,500 stores in 35 countries, said on Thursday it expected an underlying operating profit of around 3.1 billion euros ($4 billion) this year, having achieved 1.1 billion euros in the first half.

That would suggest full-year profit growth of about 12 percent, towards the top end of analysts' forecast range, according to Reuters data. Retailers, particularly in developed markets, are battling to emerge from a deep recession and worried that steps to rein in government debts -- like higher taxes and public spending cuts -- could hit consumer demand in the months ahead.

U.S. retail sales fell in June, while sales in the euro zone remain subdued. [ID:nN14122226] [ID:nLDE6640NK]

Carrefour, the world's No.2 retailer by sales behind U.S. group Wal-Mart (WMT.N), is one-third of the way through a three-year overhaul plan aimed at tackling underperformance in its main western European markets and delivering 4.5 billion euros of savings. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a StarMine data table see here

For a comparison graphic - global retailers see here

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EXPANSION IN CHINA AND INDIA

It is also looking at exiting countries where it is not among the market leaders, while seeking to expand in China and India, and recently struck a compromise deal with unions to restructure its loss-making Belgian arm. [ID:nLDE6611SU]

"With its first-half performance, ... execution of the transformation plan and the executive board team now in place, Carrefour is building on its momentum to achieve its 2010 objectives," Chief Executive Lars Olofsson said.

Sales reached 24.921 billion euros in the three months ended June, slightly above the 24.79 billion euros forecast in a Reuters poll and up from 5.5 percent in the first quarter.

But sales at stores open over a year, excluding fuel, fell 1.1 percent following 0.3 percent growth in the first quarter.

Carrefour said strong growth in Latin America, improving sales in China and market share gains in France helped to offset tougher conditions elsewhere in Europe, such as Spain, which was hit by government austerity measures, and Belgium, which suffered from strikes against the group's restructuring plan.

The group also announced a deal to buy a 51 percent stake in Baolongcang, a Chinese firm which operates 11 hypermarkets in the Hebei region close to Beijing for an undisclosed sum.

Carrefour shares have lagged the STOXX 600 European retail index .SXRP by 2 percent this year, but trade at a higher multiple of forecast earnings than Wal-Mart and British rival Tesco (TSCO.L) due to optimism about its turnaround plan.

The stock closed at 35.33 euros on Thursday, valuing the business at about 25 billion euros. (Additional reporting by Mark Potter in London, editing by Marcel Michelson, Sharon Lindores) ($1=.7803 Euro)