UPDATE 2-Sara Lee raises forecast, shares rise

(Corrects description of commodity derivative gain in paragraph 7)

* EPS $0.41 including items vs year earlier $0.32

* Raises 2010 earnings forecast

* Shares rise 5.3 pct

CHICAGO, Nov 5 - Sara Lee Corp <SLE.N> posted higher quarterly earnings and raised its full-year earnings forecast on Thursday, as cost cuts and lower spending on advertising helped offset falling sales.

Its shares rose more than 5.3 percent in premarket trading.

The maker of Sara Lee bread and Jimmy Dean sausage said profit was $284 million, or 41 cents a share for the first quarter that ended Sept. 26, compared with $230 million, or 32 cents a share, a year earlier.

Earnings were boosted by 19 cent-a-share contingency payment related to the 1999 sale of the company's European tobacco business, the last such payment the company is due to receive.

Sara Lee announced in September that it would sell its personal-care brands such as Sanex and Brylcreem to Unilever Group <ULVR.L> for $1.87 billion. It also said then it had seen significant interest in its household products business, which includes Ambi Pur air freshener and Kiwi shoe polish.

Excluding one-time items and the tobacco payment, earnings were 19 cents a share. Analysts on average forecast 16 cents a share, according to Thomson Reuters I/B/E/S.

Corporate expenses fell to $58 million in the quarter from $99 million a year earlier, largely due to a $32 million increase in the market value of commodities derivative contracts the company holds.

Sales from continuing operations fell 7.4 percent to $2.59 billion, pressured by unfavorable currency exchange rates, lower volume and planned business exits.

The company said it now expects 2010 earnings per share of 90 cents to 96 cents a share, excluding one-time items, compared with the company's previous forecast of 84 to 90 cents a share.

Sara Lee's shares rose to $12 in premarket trading from Wednesday's New York Stock Exchange close of $11.40.