UPDATE 3-Ahold accelerates buyback as Q2 falls short

* Q2 underlying operating profit 275 mln euros, vs forecast 309 mln

* Hit by below-forecast U.S. results, timing of Easter, weaker dollar

* To complete share buyback by March 2012, ahead of plan

* To open convenience stores in Germany next year

* Shares down 2.5 pct vs European retail sector up 0.3 pct (Adds CEO, analyst comments, shares, background)

By Mark Potter

LONDON, Aug 25 (Reuters) - Dutch grocer Ahold joined rivals struggling to pass on rising food costs to cash-strapped shoppers and posted a bigger-than-expected drop in second-quarter profit on Thursday.

The group said it was accelerating its share buyback programme but this did not signal it had given up hope of making acquisitions.

It underscored its growth ambitions by announcing plans to take its Dutch convenience store format into Germany next year.

"We don't see any big change in customer behaviour today than the previous quarter," chief executive Dick Boer told reporters when asked about trading so far in the third quarter.

Retailers across Europe and the United States are finding it hard to pass on the rising cost of groceries to shoppers grappling with higher fuel costs, subdued wages growth, austerity measures and fears of recession.

Belgian group Delhaize , which like Ahold makes most of its sales in the United States, earlier this month missed second-quarter profit forecasts.

At 0705 GMT, Ahold shares were down 2.5 percent at 8.13 euros, the biggest drop among European blue-chip stocks.

"While the accelerated share buyback is good news, we are not sure it fully mitigates weaker Q2 margins," Credit Suisse analysts wrote in a research note.

"We expect operating income consensus (forecasts) to now come under some pressure."

Ahold, which runs Dutch market leader Albert Heijn, said underlying operating income dropped 21 percent to 275 million euros in the 12 weeks to July 17, below a forecast for 309 million in a Reuters poll of analysts.

A weaker U.S. dollar, the timing of Easter and restructuring charges all contributed to the decline, it said.

GERMAN AMBITIONS

Sales fell 3.5 percent to 6.87 billion euros, slightly better than expected, and the group said it was growing market share in the United States and Netherlands.

However, same-store U.S. sales were up 1.2 percent excluding petrol and the underlying U.S. retail operating margin was 4.1 percent, both slightly below forecast.

Boer said U.S. grocery prices were rising around 4 percent, with the cost of some staple products like milk jumping as much as 10 percent.

This was leading customers to focus on promotions and in some cases switch to cheaper own-brand products, he added.

Underlying sales and operating margin in the Netherlands were up 2.6 percent and 6.2 percent respectively, broadly in line with estimates.

Ahold, which runs Stop & Shop, Giant-Landover and Giant-Carlisle in the United States, has consistently grown sales faster than rivals, helped by it refocusing on low prices before the recession and strength in the wealthier northeast of the United States.

Yet its shares trade at a discount to most, in part because it has little exposure to faster-growing emerging markets.

The group, with almost 3,000 stores in 12 countries, has long been looking to use its 2 billion euro-plus cash pile to accelerate growth. So far it has only bought a few small parcels of stores.

Boer said plans to complete its 1 billion euro share buyback by March 2012, around six months ahead of schedule, would not impact its ability to make acquisitions.

The group will revamp is Albert Heijn To Go convenience stores in the Netherlands to put a greater emphasis on "ready to eat" goods and planned to extend the format into Germany next year, and potentially also Belgium, he said.

Larger rivals like Wal-Mart , Carrefour and Tesco are also expanding their convenience stores as time-pressed shoppers look to do more shopping locally and save on petrol costs.

There were no plans to open supermarkets in Germany, Boer added. ($1 = 0.694 euro) (Editing by Dan Lalor)