CORRECTED - UPDATE 3-Goodyear posts surprise profit after items

(Corrects second paragraph to show company took $160 million charge in fourth quarter, and third paragraph to show total charges stemming from the plant closure will be $270 million. Also corrects sixth paragraph to show plant will be closed by end of 2011.)

* Sales rise 14 percent

* Plant to shut in Union City, Tennessee by end-2011

* Goodyear unit volume to rise 3-5 pct in 2011

* Shares up 10 pct (Adds comments from analysts' call, background; updates share price)

By Bernie Woodall

DETROIT, Feb 10 (Reuters) - Goodyear Tire and Rubber Co (GT.N) posted a narrower-than-expected quarterly loss, sending its shares up 10 percent, as it countered skyrocketing rubber costs with sales of more profitable tires.

The top U.S. tire maker also took a charge of $160 million in the fourth quarter to shutter a tire plant in Tennessee.

The company expects to take another $110 million in charges later in 2011, bringing Goodyear's total charges stemming from the closure to $270 million.

About 1,900 workers will lose their plant jobs in Union City in northwest Tennessee, a city of about 10,500 people where Goodyear is a top employer.

This was the only one of Goodyear's seven unionized U.S. tire-making facilities left unprotected when the company reached a 4-year deal in 2009 with the United Steelworkers union.

Closing the plant will realize annual costs savings of $80 million, Goodyear said. The plant will cease production and close by the end of this year.

Goodyear Chief Executive Richard Kramer said the Union City plant, built in 1968, was not cost competitive.

2011 GROWTH

Growth in the tire industry will lead to an increase of 3 to 5 percent in Goodyear unit sales in 2011, the company said.

Goodyear posted a fourth-quarter net loss of $177 million, or 73 cents per share, compared with year-earlier net income of $107 million, or 44 cents per share.

Sales rose 14 percent to $5.07 billion. Revenue per tire rose 12 percent.

Excluding one-time items, Akron, Ohio-based Goodyear reported earnings of 7 cents per share. Analysts on average had expected a loss of 7 cents, according to Thomson Reuters I/B/E/S.

The price mix savings of $689 million for 2010 more than offset the $685 million rise in costs of raw materials for the full year.

Natural rubber has gone to a price of more than $2.50 per pound from $1.80 last October, the last time the company reported quarterly earnings.

In 2010, the cost of natural rubber was 40 percent of Goodyear product costs, up from 35 percent in 2009, Chief Financial Officer Darren Wells said.

"Our operating results reflect significant recovery, with improvement across all of our businesses versus last year despite escalating raw material costs," Kramer said in a press statement.

Goodyear said it expected raw material costs to rise 25 to 30 percent in the first quarter from a year earlier.

On a conference call with analysts, Wells said the company expects the second quarter to show 25 to 30 percent increases in raw materials costs.

Shares of Goodyear rose 10.6 percent at $13.83 at mid-afternoon on the New York Stock Exchange. (Reporting by Bernie Woodall; Editing by Lisa Von Ahn and Richard Chang)