UPDATE 1-Harry Winston posts strong profit, beats estimates

* Q2 EPS $0.22 vs loss $0.32/shr a year ago

* Analysts had forecast EPS $0.04

* Sales up 62 percent at $153.7 million (In U.S. dollars unless noted)

TORONTO, Sept 1 (Reuters) - Harry Winston Diamond Corp HW.TO posted a stronger than expected profit on Wednesday, as robust diamond sales in both its mining and retail segments boosted second-quarter results.

The Canadian diamond miner and retailer posted a profit of $16.5 million, or 22 cents per share. That compared with a year-ago loss of $24.5 million, or 32 cents per share, for the three months ended July 31.

A foreign exchange gain of $3.3 million helped boost the latest results, compared with a foreign exchange loss of $25.3 million in the second quarter of 2009.

Analysts had estimated, on average, earnings of $3 million, or 4 cents per share, according to data from Thomson Reuters I/B/E/S.

Sales for the quarter rose 62 percent to $153.7 million.

The company reported $86.8 million in rough diamond sales, an 89 percent increase over the same period in 2009, while retail sales grew 37 percent to $66.9 million.

Rough diamond production for the three months ended June 30 was 0.65 million carats, up 14 percent from the year-ago period when lower volumes of ore were mined due to the soft rough diamond market.

In August, Harry Winston closed a $220 million deal to reinstate its 40 percent stake in the Diavik diamond mine in northern Canada by buying back the 9 percent interest in the mine it sold to Kinross Gold (K.TO) to bolster its balance sheets in the aftermath of the economic crisis.

The company's shares closed up 2 Canadian cents at C$10.75 on the Toronto Stock Exchange on Wednesday.

($1=$1.05 Canadian) (Reporting by Julie Gordon; editing by Rob Wilson)