UPDATE 1-Australia's Woolworths Q1 sales defy gloom

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MELBOURNE, Oct 21 (Reuters) - Woolworths Ltd (WOW.AX), Australia's largest supermarket chain, saw sales growth accelerate to 9.6 percent in the first quarter as food and liquor sales withstood slower consumer demand, and it maintained its full-year sales outlook.

Sales growth rose from the 7.5 percent reported in the fourth quarter, boosted by store refurbishments, the company said on Tuesday.

Woolworths Chief Executive Michael Luscombe said that subject to the uncertainty about discretionary spending, full-year sales growth would be in the upper single digits, as previously forecast.

Consumer spending in Australia has slowed sharply this year, but economists say there are signs confidence improved after the central bank unexpectedly slashed official interest rates by 1 percentage point this month in response to the global financial crisis.

Woolworths' same-store sales in Australian food and liquor rose 6.0 percent, up from 4.9 percent in the fourth quarter.

Analysts at Citi had forecast total sales up 8.7 percent and same-store food and liquor for Australia to rise 5.7 percent.

Shares in Woolworths were up 1.0 percent at A$28.30 in early trade, having risen more than 5 percent on Monday ahead of the sales report.

Woolworths, which continues to take market share from rival Coles, owned by Wesfarmers Ltd (WES.AX), said total sales for the 14 weeks to Oct. 5 rose to A$12.8 billion ($9.0 billion) from A$11.7 billion a year earlier.

In its first quarter, Coles posted sales growth of 2.6 percent, barely keeping up with inflation, as its new owners set about a five-year overhaul.

Woolworths and Coles together control about 80 percent of Australia's packaged grocery market.

Woolworths said comparable store sales at its Big W discount stores rose 4.4 percent in the first quarter, up from 2.6 percent in the fourth quarter.

In consumer electronics, including the Dick Smith chain, comparable sales rose 4.9 percent, an improvement from 3.8 percent in the prior year. Shares in Woolworths have risen 2.4 percent since the start of this month to Monday's close, compared with a decline of 10.7 percent for the broader market .AXJO as the global financial crisis deepened. ($1=A$1.42) (Reporting by Victoria Thieberger; editing by Jonathan Standing)