UPDATE 1-David Jones ups guidance, shares jump 10 pct

* David Jones sees full year profit rising 8-12 pct

* Shares rise over 10 percent

* Analysts expects other retailers to benefit

SYDNEY, June 30 (Reuters) - Australian department store chain David Jones Ltd (DJS.AX) raised its full-year profit forecast on Tuesday, sending its shares up over 10 percent and fuelling talk that retailers and the wider economy may be turning a corner.

David Jones now expects full-year profit after tax to rise by 8-12 percent for the year to June, up from 0-5 percent forecast previously, due to a strong trading performance in May and June, the company said in a statement.

Its shares rose 10.2 percent to A$4.55 at 0016 GMT, outperforming the S&P/ASX 200 index which was up 1.6 percent.

"David Jones is a barometer for the discretionary spending sector so if David Jones is in itself experiencing some good conditions, I don't see why the others won't get some benefit too," said Lucinda Chan, division director at Macquarie Equities.

Shares in Australian electricals and furniture retailer Harvey Norman Holdings Ltd (HVN.AX) was up 5.9 percent at A$3.22 at 0016 GMT.

"The government stimulus is working quite well. People are going out and people are spending. Hopefully this would be a sign that markets are turning the corner," Chan said.

David Jones also reaffirmed up to 5 percent growth in profit after tax for fiscal 2010.

"Whilst we still have to trade through July to complete the fourth quarter and we are not planning to repeat the clearance of excess inventory undertaken in July 2008, our trading to date has been pleasing and well above our expectations," David Jones Chief Executive Mark McInnes said in the statement. ($1=A$1.25) (Reporting by Mette Fraende and Gui Qing Koh; Editing by Mark Bendeich)