UPDATE 3-Australia's Woolworths Q2 sales up 11.5 pct

(Adds company comment)

By Victoria Thieberger

MELBOURNE, Jan 31 (Reuters) - Woolworths Ltd. (WOW.AX), Australia's largest retailer, said on Wednesday second-quarter sales climbed 11.5 percent as its market share increased, and maintained its sales outlook for the year.

Shares in Woolworths rose 0.4 percent to A$23.74 by afternoon, having climbed 2.5 percent on Tuesday on hopes of strong sales, amid a weaker broader market .AXJO.

"It's a pretty strong result, no doubt about that. The momentum is very strong," said FW Holst analyst David Spry.

"At this stage they haven't provided any (profit) update but I wouldn't be surprised at their half-year result if they tick it up a little bit, and some analysts may increase their forecasts as well," Spry said.

For fiscal 2007, analysts expect Woolworths to post a net profit of A$1.24 billion, up 23 percent from fiscal 2006 and roughly in line with company forecasts for a 16-21 percent increase, according to 10 analysts surveyed by Reuters Estimates.

The Australian food and liquor division, which accounts for about two-thirds of total sales, saw sales rise 8.9 percent to A$7.29 billion, with food inflation running at about 4.0 percent.

Chief Executive Michael Luscombe said the all-important December trading period had been solid.

"The positive momentum has continued... with strengthened sales results in all divisions delivering both accelerated growth and increased market share," he said.

Comparable food and liquor sales were up 6.4 percent in the quarter, and comparable petrol sales were up 4.5 percent.

Food inflation was about 4 percent in the quarter, but improved into the mid-3 percent range in January, Luscombe said.

Woolworths posted second quarter sales of A$11.35 billion

($8.8 billion) for the 13 weeks to Dec. 31. For the first half, sales rose 15.9 percent to A$22.09 billion.

Comparable sales at discounter Big W were up 1.1 percent in the quarter, a small improvement after a recent slump. Discount stores generally have suffered in the recent solid sales period, as consumers moved upmarket.