McDonald's Corp posted higher quarterly profit helped by strength in Europe and a small rise in December sales in the United States, where high unemployment and rampant discounting are straining results.

McDonald's shares rose 2 percent as the world's largest hamburger chain also said closely watched U.S. same-store sales gained 1 percent in December after two months of declines. That surprised analysts, who expected a 0.6 percent drop, according to RBC Capital Markets analyst Larry Miller.

Sales trends accelerated across all regions from November to December, Bernstein Research analyst Sara Senatore said in a client note, and the company said the trend was continuing.

As we begin 2010, McDonald's January global comparable sales trend remains positive, McDonald's Chief Executive Jim Skinner said in a statement.

Executives said U.S. sales are benefiting from the January national debuts of the breakfast Dollar Menu and the Mac Snack Wrap -- a new spin on its popular Big Mac hamburger that sells for around $1.50 -- as well as existing McCafe coffee drinks and the premium-priced Angus Burger.

While McDonald's added breakfast items to its Dollar Menu and promoted its low-priced menu items, rival Burger King introduced a $1 double cheeseburger in the United States during the fourth quarter. Meanwhile the price of a McDonald's Double Cheeseburger recently rose above $1 in many markets after the company replaced the item on its Dollar Menu with a double burger with just one slice of cheese.

December same-store sales in Europe rose 5.1 percent, topping Wall Street's call for a rise of 4.6 percent, while the Asia-Pacific, Middle East and Africa region were up just 1 percent, missing analysts' call for a gain of 4.2 percent, Miller said.

Globally, same-store sales increased 2.7 percent for December and 2.3 percent for the quarter.

Shares of McDonald's were up $1.27 or 2 percent at $64.47 on Friday afternoon on the New York Stock Exchange.

Burger King shares were up 2.6 percent. Shares of Taco Bell, KFC and Pizza Hut parent Yum Brands Inc -- which gets a large portion of its profit from China -- were down 0.5 percent.


McDonald's said fourth-quarter profit was $1.22 billion, or $1.11 a share, up from $985.3 million, or 87 cents a share, a year earlier.

Excluding one-time items, McDonald's earned $1.03 a share. On that basis, analysts' average forecast was $1.02, according to Thomson Reuters I/B/E/S.

Revenue, which includes sales from company-owned restaurants plus royalties from franchisees and other fees, rose 7 percent to $5.97 billion, topping analysts' forecast of $5.94 billion.

Lower food costs and the weaker U.S. dollar helped boost profits for the quarter, said Edward Jones analyst Jack Russo.

Looking ahead, McDonald's expects the weak dollar to boost profit by 5 to 6 cents a share in the first quarter and 6 to 8 cents a share in 2010. Executives do not expect food prices to rise dramatically this year.

McDonald's and some other fast-food chains benefited when the global economic downturn sent customers to lower-priced fare, including McDonald's Dollar Menu items. But lingering joblessness and falling grocery prices have convinced consumers to eat more meals at home, hurting all restaurant companies.

I still think it's going to be a challenging year for the consumer, Russo said, and McDonald's added that it will continue targeting consumers with lower-priced items.

We expect to keep the pedal to the metal regarding value, Skinner said on a conference call with analysts.

Still, McDonald's is in a stronger position than many of its peers. The fast-food company has better relations with franchisees lately than Burger King, it has plenty of cash to spend on remodeling restaurants and developing new menu items, and its broad global reach helps smooth sales because when some regions are weak, others tend to be stronger.

(Editing by Steve Orlofsky, Gunna Dickson and Matthew Lewis)