(Recasts; adds investor comment, details on competitors, byline; updates share activity)
LOS ANGELES/CHICAGO, April 22 (Reuters) - McDonald's Corp (MCD.N) on Tuesday posted its first monthly sales decline at established U.S. restaurants in five years, overshadowing strong overseas sales that produced higher-than-expected first-quarter profit.
The March U.S. sales drop sent McDonald's shares 1.3 percent lower in afternoon trade and dragged down stocks in the fast-food sector, which had been somewhat insulated from the U.S. economic slowdown as cash-strapped consumers moved to cheaper restaurants.
Shares of fast-food rival Burger King Holdings Inc BKC.N fell 4 percent, while Yum Brands Inc (YUM.N) and Wendy's International WEN.N each shed just over 2 percent.
Janna Sampson, co-chief investment officer at Oakbrook Investments in Lisle, Illinois, said McDonald's usually posts the industry's strongest numbers and noted that company executives said it gained market share during the first quarter.
"That doesn't bode well for the other guys," Sampson said.
McDonald's said sales at its U.S. restaurants open at least 13 months rose 2.9 percent in the first quarter but fell 0.8 percent in March. Overall same-store sales rose 3.3 percent in the 2007 fourth quarter.
The March decline "certainly speaks to a challenging industry sales environment and a modest deceleration at (McDonald's)," Goldman Sachs analyst Steven Kron said in a client note.
The world's largest restaurant chain operator posted net income of $946.1 million, or 81 cents per share, for the first quarter, up from $762.4 million, or 62 cents per share, a year earlier.
Analysts, on average, had forecast 70 cents per share, according to Reuters Estimates.
Revenue rose 6 percent to $5.61 billion. Analysts had been looking for $5.55 billion.
Same-store sales rose 7.4 percent in the quarter, fueled by international results that outpaced analysts' expectations. Same-store sales rose 11.1 percent in Europe and 9.4 percent in the Asia/Pacific, Middle East and Africa segment.
Tight cost controls also helped boost the first-quarter results.
Despite the March sales figures and concern that the weakening U.S. economy is starting to hurt McDonald's, the stock is still a good investment relative to others in the restaurant sector, said Dave Kolpak, analyst at Victory Capital Management.
"There's no question that it is affecting its business, but we as investors look at McDonald's relative to other investment opportunities and we see McDonald's gaining market share at an impressive pace, with people trading down from casual dining."
Victory owns 1.6 million McDonald's shares and has assets of $62 billion under management.
For April, McDonald's forecast a 2 percent to 2.5 percent increase in U.S. same-store sales. It forecast a 5.5 percent to 6.5 percent increase in European same-store sales, and a 6.5 percent to 7.5 percent increase in the Asia/Pacific, Middle East and Africa region.
Shares of Yum -- the operator of the KFC, Pizza Hut and Taco Bell chains -- were down 93 cents to $38.14, Burger King was off $1.13 to $27.36, and Wendy's fell 55 cents to $24.75.
Through Monday, McDonald's shares had risen 21 percent over the past year. (Reporting by Brad Dorfman and Lisa Baertlein, editing by Maureen Bavdek and John Wallace)