PREVIEW-Danone seen posting slight profit rise

* H1 EBIT seen at 1.187 bln eur vs 1.177 bln year ago

* H1 sales seen at 7.573 bln eur vs 7.691 bln year ago

* Analysts looking for news on dairy performance

* Results due at 0530 GMT on July 24

PARIS, July 21 (Reuters) - French food group Danone (DANO.PA) is expected to post a slight rise in first-half operating profit on Friday as analysts look to see if the company has reversed five quarters of declining dairy volumes.

Earnings before interest and tax (EBIT) are seen rising to 1.187 billion euros ($1.68 billion) from 1.177 billion in the first six months of last year, according to the average of estimates from nine analysts polled by Reuters.

Sales are expected to have declined 1.5 percent to 7.573 billion euros from 7.691 billion, according to the poll average.

Danone, the world's biggest yoghurt maker, raised 3 billion euros through a rights issue last month to cut debt, buy smaller rivals hurt by the financial crisis and enable it to grow through the economic downturn.

The group, whose brands include Actimel yoghurt and Evian water, has seen its dairy business suffer during the crisis and demand for bottled waters decline, while its baby food and medical nutrition divisions have achieved significant growth.

Danone has sought to revive the dairy traditions of its business by changing its approach to pricing. Dairy makes up some 57 percent of sales.

"We believe that Q2 will demonstrate much more extreme pricing cuts than in Q1, resulting in recovery in volume growth ahead of expectations," Nomura analysts wrote in a note.

"The question will be whether the market is encouraged by the renewed momentum in volumes for the division or whether the price pullback becomes a worry, with concern about the sustainability of such a strategy as the company laps the discounting into 2010."

Danone's waters business has seen demand wane in developed markets such as France and the UK, though a hotter month of June in western Europe may have helped, while emerging markets continue to grow, analysts said.

"Overall we expect divisional growth to be slightly positive in Q2 (in water)," Credit Suisse analysts said in a note.

"Baby food remains resilient, although we anticipate a slight deceleration in volumes and lower pricing," the Credit Suisse analysts added. "We expect clinical nutrition to continue growing at 10 percent."

Danone has set a full-year group target of like-for-like sales growth of a few points below its medium-term guidance of 8-10 percent and a like-for-like operating margin improvement.

The group has also forecast a 10 percent rise in underlying, fully diluted earnings per share at constant exchange rates, excluding the dilutive effect of the issue of new shares. Danone is due to publish its results for the first half of the year at 0530 GMT on Friday. ($1=.7063 Euro)

(Reporting by James Regan; editing by John Stonestreet)