* Earnings of $1.12/share before items vs $1.15 Wall Street view
* Sales also miss estimates in fourth quarter
* Barbie sales down 4 percent worldwide
* Prices up by low single digits globally effective Jan. 1
Feb 1 (Reuters) - Mattel Inc, the maker of Barbie dolls and Hot Wheels cars, is raising prices globally as it looks to rebound from a lackluster holiday selling season plagued by concerns about the U.S. economy.
Friday's news helped the No. 1 toymaker's shares recover in morning trading. They rose about 1 percent to $38.55, their highest level since 1998, after falling as much as 2.3 percent to $36.75 earlier in the session.
While Mattel missed Wall Street's profit and sales estimates for the fourth quarter on weak demand for its mainstay Barbie and some games, it reassured investors about its margin prospects by talking about cost cuts and the global Jan. 1 price increase, which it said was in a low single-digit percentage range.
Despite the sales miss, Mattel still appears to have gained market share from smaller rivals such as Hasbro Inc in the United States and nearly a half-dozen European markets, analysts said.
Last month, Hasbro had warned its fourth-quarter revenue might fall far short of analysts' estimates because of weaker-than-expected demand in what is typically the biggest selling season of the year.
"The retail environment was very difficult in the fourth quarter," said MKM Partners LLC analyst Eric Handler.
U.S. shoppers held back a bit during the 2012 holiday season, spending only 3 percent more than 2011 because of concerns about the economy, the National Retail Federation has said.
Sales of Barbie products fell 10 percent in North America in the fourth quarter, which Handler said was the steepest decline for the brand in several years.
But some of the weakness in the Barbie brand stems from the rising popularity of other Mattel dolls, such as Monster High, which appeared on many hot toy lists in 2012, Needham analyst Sean McGowan said.
"To some extent, Monster High is taking a lot of business from a lot of dolls," McGowan said. Barbie "just ran into its own competitor."
Both analysts expect Mattel to have a better 2013. Handler tied his optimism to the company's strong product lineup and the slowly recovering global economy.
Hasbro's lack of entertainment-themed toys could hurt its prospects in the near term, said Handler, who rates Mattel shares as "buy" and Hasbro as "neutral."
It will be another two years before the release of another "Transformers" movie, which is based on a Hasbro brand, Handler said.
Hasbro plans to report its fourth-quarter results on Feb. 7.
WEAK SALES GROWTH
Mattel, also home to Hot Wheels cars and Fisher-Price toys, said its net income had fallen to $306.5 million, or 87 cents a share, from $370.6 million, or $1.07 a share, a year earlier.
Excluding a litigation charge, the company earned $1.12 a share, missing the analysts' average estimate of $1.15, according to Thomson Reuters I/B/E/S.
Net sales rose 5 percent to $2.26 billion, and fell short of the analysts' average estimate of $2.29 billion.
Global sales of Barbie products fell 4 percent. Sales at Mattel's entertainment business, which includes electronic games, were down 13 percent, mainly on weak demand for "Cars 2" movie-themed toys.
Also on Friday, Mattel announced a first-quarter cash dividend of 36 cents a share. That reflects an annualized payout of $1.44 a share, which would be up 16 percent from last year.