UPDATE 1-Merck 4th-quarter profit beats expectations

* EPS 87 cents ex items vs Wall St view 74 cents

* Backs 2009 forecast

NEW YORK, Feb 3 (Reuters) - Merck & Co (MRK.N) reported better-than-expected fourth quarter profit on Tuesday, helped by cost controls and sales of its diabetes drugs.

The company earned $1.64 billion, or 78 cents per share. That compared with a loss of $1.63 billion, or 75 cents per share, in the year-earlier period, when Merck took a $4.85 billion charge related to a legal settlement for its withdrawn Vioxx arthritis drug.

Excluding special items, earnings were 87 cents per share, 13 cents ahead of analysts' average estimate, according to Reuters Estimates. (Reporting by Lewis Krauskopf and Ransdell Pierson; editing by John Wallace)