UPDATE 4-McDonald's profit, Dec. same-store sales rise

* Q4 EPS ex-items $1.03; Street view $1.02

* Dec same-store sales up 2.7 pct; up 1 pct in U.S.

* CEO: Jan same-store sales trend positive

* Shares up 2 percent
(Adds executive comments, updates share activity)

By Lisa Baertlein and Brad Dorfman

LOS ANGELES/CHICAGO, Jan 22 (Reuters) - McDonald's Corp
(MCD.N) posted higher quarterly profit helped by strength in
Europe and a small rise in December sales in the United States,
where high unemployment and rampant discounting are straining
results.

McDonald's shares rose 2 percent as the world's largest
hamburger chain also said closely watched U.S. same-store sales
gained 1 percent in December after two months of declines. That
surprised analysts, who expected a 0.6 percent drop, according
to RBC Capital Markets analyst Larry Miller.

Sales trends accelerated across all regions from November
to December, Bernstein Research analyst Sara Senatore said in a
client note, and the company said the trend was continuing.

"As we begin 2010, McDonald's January global comparable
sales trend remains positive," McDonald's Chief Executive Jim
Skinner said in a statement.

Executives said U.S. sales are benefiting from the January
national debuts of the breakfast Dollar Menu and the Mac Snack
Wrap -- a new spin on its popular Big Mac hamburger that sells
for around $1.50 -- as well as existing McCafe coffee drinks
and the premium-priced Angus Burger.

While McDonald's added breakfast items to its Dollar Menu
and promoted its low-priced menu items, rival Burger King
BKC.N introduced a $1 double cheeseburger in the United
States during the fourth quarter. Meanwhile the price of a
McDonald's Double Cheeseburger recently rose above $1 in many
markets after the company replaced the item on its Dollar Menu
with a double burger with just one slice of cheese.

December same-store sales in Europe rose 5.1 percent,
topping Wall Street's call for a rise of 4.6 percent, while the
Asia-Pacific, Middle East and Africa region were up just 1
percent, missing analysts' call for a gain of 4.2 percent,
Miller said.

Globally, same-store sales increased 2.7 percent for
December and 2.3 percent for the quarter.

Shares of McDonald's were up $1.27 or 2 percent at $64.47
on Friday afternoon on the New York Stock Exchange.

Burger King shares were up 2.6 percent. Shares of Taco
Bell, KFC and Pizza Hut parent Yum Brands Inc (YUM.N) -- which
gets a large portion of its profit from China -- were down 0.5
percent.

PROFITS CLIMB

McDonald's said fourth-quarter profit was $1.22 billion, or
$1.11 a share, up from $985.3 million, or 87 cents a share, a
year earlier.

Excluding one-time items, McDonald's earned $1.03 a share.
On that basis, analysts' average forecast was $1.02, according
to Thomson Reuters I/B/E/S.

Revenue, which includes sales from company-owned
restaurants plus royalties from franchisees and other fees,
rose 7 percent to $5.97 billion, topping analysts' forecast of
$5.94 billion.

Lower food costs and the weaker U.S. dollar helped boost
profits for the quarter, said Edward Jones analyst Jack Russo.

Looking ahead, McDonald's expects the weak dollar to boost
profit by 5 to 6 cents a share in the first quarter and 6 to 8
cents a share in 2010. Executives do not expect food prices to
rise dramatically this year.

McDonald's and some other fast-food chains benefited when
the global economic downturn sent customers to lower-priced
fare, including McDonald's Dollar Menu items. But lingering
joblessness and falling grocery prices have convinced consumers
to eat more meals at home, hurting all restaurant companies.

"I still think it's going to be a challenging year for the
consumer," Russo said, and McDonald's added that it will
continue targeting consumers with lower-priced items.

"We expect to keep the pedal to the metal regarding value,"
Skinner said on a conference call with analysts.

Still, McDonald's is in a stronger position than many of
its peers. The fast-food company has better relations with
franchisees lately than Burger King, it has plenty of cash to
spend on remodeling restaurants and developing new menu items,
and its broad global reach helps smooth sales because when some
regions are weak, others tend to be stronger.
(Editing by Steve Orlofsky, Gunna Dickson and Matthew Lewis)