CORRECTED-Emerson sees negative underlying sales growth in 2010

(Company corrects to say underlying sales growth, not sales, to remain negative in 2010; and emerging markets to account for 40-45 percent of sales, not more than 60 percent, and within five years, not over five to six years)

* Sees underlying sales growth negative in 2010

* Says recovery unlikely before late 2010

* Has identified 322 companies for possible acquisitions

* Sees operating profit growing 15-17 pct annually by 2011 (Adds details, quotes)

HONG KONG, Oct 30 - Industrial conglomerate Emerson Electric Co expects underlying sales growth to remain negative in 2010 as the global economic downturn batters demand, scuttling hopes for an earlier recovery, its chairman said on Friday.

Emerson, which makes everything from equipment used to run factories to shelving for consumers, had said in August that its order rates were stabilising, raising hopes that industrial demand was bottoming..

But Emerson's Chairman David Farr, speaking at an American Chamber of Commerce event in Hong Kong, said no significant recovery was likely before late 2010, reiterating the company's earlier forecast.

"We'll be down for the next couple of years," Farr said, referring to the company's underlying sales growth.

Still, Emerson aims to boost its operating profit growth rate to 15-17 percent per year and underlying sales to 5-7 percent by 2011, Farr told Reuters on the sidelines of the event.

"I think it's going to be very challenging (to meet)," he said. "The global recovery is going to be muted, especially in developed countries."

In August, Emerson reported a 37 percent drop in quarterly net profit as the strong U.S. dollar reduced sales in four of its five divisions..

ACQUISITION HUNT

The St. Louis-based company, which bought network equipment technology provider Avocent Corp for about $1.2 billion in October, was "actively courting companies", Farr said.

Emerson has identified 322 companies with $49 billion worth of sales for possible acquisitions, he added.

He declined to be specific on the type of acquisitions, but said deals could be worth $500 million to $1 billion.

Emerson has said it expects to spend up to $1.5 billion on acquisitions this fiscal year, which began this month, and up to $400 million on share repurchases..

Farr added that emerging markets including China, India and Southeast Asia would account for 40 to 45 percent of sales within five years, up sharply from 33 percent now.

In the next three to four years, Asia will account for about $6 billion of sales, of which China will make up half, Farr said.

"China will be a $3-4 billion business, but it wouldn't surpass the U.S., not in my tenure," Farr said. "I don't want it to be all China. We'll try to have a balanced approach. I don't want one market to take me down."