UPDATE 4-Dow Chemical posts surprise profit, shares surge

* Q1 adj shr profit $0.12 vs. estimate shr loss $0.20

* Sales down 39 percent

* Seeing signs of pace of economic decline moderating

* Looking to sell agriculture business

* Shares up 16.6 pct (Recasts with conference call comments, additional analyst comments)

By Hezron Selvi

NEW YORK, April 30 (Reuters) - Dow Chemical Co (DOW.N) posted a surprise first-quarter profit on Thursday, helped by cost reductions, gains in its agricultural segment and lower raw material costs, sending its shares up as much as 20 percent.

In a conference call, Chief Executive Andrew Liveris said he was looking at partnerships in Kuwait similar in scope to Dow's failed K-Dow venture with an investment arm of the country's government and is planning to sell or spin off the company's high flying agricultural unit.

Earlier in the day, Dow, the second-largest U.S. chemical company behind DuPont (DD.N) in terms of market capitalization, reported net income of $24 million, or 3 cents a share, down from $941 million, or 99 cents a share, a year ago.

Excluding items, Dow earned 12 cents a share, compared with the loss of 20 cents expected by analysts, according to Reuters Estimates.

Sales fell 39 percent to $9.09 billion, while the analysts' average forecast was $11.61 billion.

"It all comes down to cost management. Most people thought that their revenues will decline more rapidly than their costs. And to me that was the biggest source of the beat," Analyst Hassan Ahmed of HSBC Securities told Reuters.

Chemical companies have been hurt by the weakening economy as demand from industries they supply, such as autos, housing and electronics, has fallen drastically.

In December, Dow said it would close 20 facilities, divest several businesses and cut 5,000 jobs to deal with the global slump.

"Since December we have delivered about half of the 5,000 commitment to reduce our global workforce, and we are 17 percent ahead of our planned savings," Liveris said.

The company said it had cut spending by $270 million in the quarter from a year earlier, and that purchased feedstock and energy costs were down 49 percent.