Consumer goods group Unilever said 2012 will be a difficult year as growth in emerging markets, which accounts for more than half its business, slows and demand in Europe and North America stays flat at best.

The gloomy outlook sent shares in the Anglo-Dutch group sharply lower early on Thursday after it broadly matched 2011 sales growth and profit margin forecasts.

Unilever, which pushed up the prices of brands such as Dove, Hellmann's, and Knorr to offset higher commodity costs, said growth in emerging markets had now slowed due to these price rises and weak consumer confidence.

Finance director Jean-Marc Huet said growth in emerging markets such as Africa, Asia and Latin America stayed strong but the company needed to do better in Russia and eastern Europe where its performance was sluggish.

We have seen a deceleration in some markets and one or two are now more difficult, so our focus is on Russia and eastern Europe where we need to improve, he told reporters.

Huet added that the global economy was in poor shape and so there will not be many price rises this year as the group needs to take into account the fragile nature of consumer confidence after its fourth quarter growth relied heavily on price hikes.

The world's third-biggest consumer goods group reported underlying sales in 2011 rose 6.5 percent in line with forecasts of 6.4 percent, with four-quarter growth of 6.6 percent compared to rival Procter & Gamble which saw a 4 percent rise.

Unilever shares were the second biggest faller on London's FTSE 100 index, down 3.1 percent at 2,021 pence by 10 a.m. They had outperformed European markets by 20 percent in 2011 and European food and beverage stocks by 4 percent.

The cautious market outlook will be the focus as emerging market volume growth slows, said Citi analyst Robert Dickinson, adding that fourth quarter volume growth in its Asia, Africa and central and eastern Europe region was just 2.8 percent.

Its fourth quarter underlying sales rose 6.6 percent, just missing forecasts of 6.8 percent but the rise was made up of 6.5 percent from price and just 0.1 percent from volume gains.

Emerging markets, which make up 54 percent of Unilever's business, grew 11.5 percent in 2011. In product terms, its personal care goods like Lux and Sunsilk were the fastest growing at 10 percent while its foods grew just over 3 percent.

We expect the macro-economic environment to remain difficult in 2012 and input cost headwinds will persist although to a lesser extent than in 2011, said Chief Executive Paul Polman said in a results statement.

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European food groups graphic: http://r.reuters.com/dac54s

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Analysts expect underlying sales growth to slow in 2012 to 5.1 percent from 6.5 percent but Unilever still expect to grow ahead of its markets, improve margins and see strong cash flow.

Unilever raised prices after its commodity costs rose 15 percent last year adding 2.5 billion euros to its 2011 costs, but many raw materials like vegetable oils have now fallen and the group sees input inflation of around 5 percent this year.

The group offset the extra input costs by hiking its prices and slashing costs by over 1.3 billion euros in 2011, and managed to hold its profit margins largely steady at 14.9 percent after 2010's 15 percent.

The group which sells Lipton tea, Ragu sauces and Blue Band margarine, reported 2011 core earnings per share rose 4 percent to 1.41 euros, below forecasts of 1.46 euros.

Overall annual turnover rose 5 percent to 46.5 billion euros, and it paid a quarterly dividend of 0.225 euros a share compared to 0.208 euros the same time in the previous year.

European food rivals report later this month with France's Danone on Feb 15 and Swiss Nestle

(Reporting by David Jones; Editing by Hans-Juergen Peters and Mike Nesbit)