UPDATE 2-Sony shares jump on outlook hike, Q1 profit

* Shares up 3.3 pct after hitting about 2-month intraday high

* Lifts annual outlook and posts surprise Q1 profit

* Demand booming for Bravia flat TVs and PlayStation 3

* Sales growing in developing markets

* Strong yen, tough competition, Europe woes remain risks (Adds comments, details)

By Isabel Reynolds

TOKYO, July 30 (Reuters) - Sony Corp (6758.T) shares jumped more than 3 percent and briefly hit their their highest intraday level in nearly two months after the company lifted its annual outlook on booming demand for its Bravia flat TVs and PlayStation 3 game consoles.

Thanks to aggressive cost cuts and growing sales in developing markets, the electronics and entertainment giant also returned to profit in the first quarter, surprising investors who had expected a quarterly loss. [ID:nSGE66S0B7][ID:nTOE66R02W]

"They raised their profit outlook despite the stronger yen, so of course this exceeded our expectations," said Takao Hattori, a senior analyst at T.I.W. in Tokyo.

"But the real battle comes in the third quarter, so we can't really pass judgment until we see what happens then," he added, referring to the shopping season ahead of the year-end holidays. "There is certainly some concern as to whether this trend can continue."

Sony, the world's second-largest camera maker after Canon Inc (7751.T) and the No. 3 maker of flatscreen TVs after Samsung Electronics (005930.KS) and LG Electronics (066570.KS), has suffered a dearth of groundbreaking products in recent years.

But the company singled out its minimalist "Monolithic design" televisions and lightweight NEX cameras as hit products that it hopes can spark electronics-led growth.

For the year to March 2011, Sony lifted its operating profit outlook by 12.5 percent to 180 billion yen ($2.1 billion), compared with a consensus estimate of 152.6 billion in a poll of 22 analysts by Thomson Reuters I/B/E/S.

On the downside, Sony must battle persistent strength and tough competition with South Korean rivals such as Samsung, which posted record quarterly profits on Friday, but warned that the outlook was less rosy, with demand for handsets and TVs uncertain. [ID:nTOE66T00D]

Like other exporters, Sony is keeping a wary eye on the debt crisis in Europe, which accounted for more than 25 percent of the company's sales last year, though booming demand in developing countries may help offset such risks.

The company reported April-June operating profit of 67 billion yen versus the consensus for a 13 billion yen loss in a poll of four analysts and a loss of 25.7 billion yen a year ago.

Sony shares were up 3.3 percent, against a 1.5 percent fall in the electrical machinery index IELEC.T. (Additional reporting by Sachi Izumi and Elaine Lies; Editing by Joseph Radford and Chris Gallagher)