General Mills Inc posted disappointing quarterly earnings, hurt by weaker-than-expected margins, and its shares fell more than 2 percent, while rival ConAgra Foods Inc topped Wall Street's expectations, sending shares up 4 percent.

Both packaged food companies backed their fiscal 2012 outlooks on Tuesday despite higher ingredient costs and lingering economic uncertainty.

Food companies like General Mills and ConAgra have had a tough year in 2011, as soaring costs for commodities hurt margins and consumer frugality made retailers push back against price increases.

ConAgra, maker of Chef Boyardee pasta and Hunt's ketchup, said it expected year-over-year cost inflation to peak in the current quarter, the third of its fiscal year, due to higher prices for goods such as meat, dairy and packaging. It said it now expects full-year inflation of about 10 percent, which is higher than prior expectations.

General Mills, the maker of Progresso soups and Cheerios cereal, affirmed its expectation for full-year costs to rise 10 percent to 11 percent. The company's largest inputs include grains, sugar, dairy and packaging.

The company reported net income of $444.8 million, or 67 cents per share, for the second quarter ended November 27, down from $613.9 million, or 92 cents per share, a year earlier.

Excluding the effects of accounting for commodity hedges, costs from the acquisition of Yoplait and a tax benefit, earnings were 76 cents per share.

On that basis, analysts on average were expecting 79 cents per share, according to Thomson Reuters I/B/E/S.

Chief Financial Officer Don Mulligan told Reuters that the company's performance was in line with its expectations, though gross margins had compressed more than analysts were expecting.

He cited the impact of acquiring Yoplait, which carries slimmer margins than the company overall.

Sales rose 14 percent to $4.62 billion, helped by the addition of Yoplait, increases in price and volume, and foreign exchange rates.

The company affirmed its forecast for fiscal 2012, saying it still expects earnings of $2.59 to $2.61 per share, excluding items.

Meanwhile, ConAgra's earnings of 47 cents per share, excluding items, for the second quarter ended on November 27 topped the analysts' average estimate of 43 cents. The company cited strength in its commercial foods segment, particularly improving performance at its Lamb Weston potato operations.

The commercial foods segment, which sells potato, seasonings and milled grain products to food service customers, saw sales rise 16 percent, helped by price increases.

ConAgra also affirmed its full-year outlook, saying 2012 earnings should grow at a low- to mid-single-digit percentage rate from the $1.75 per share it earned last year.

Most earnings growth in the back half of the fiscal year will be in the fourth quarter, ConAgra said.

Shares of General Mills were down 84 cents, or 2.1 percent at $38.75 in morning trade on the New York Stock Exchange, while ConAgra shares were up $1.10, or 4.4 percent, at


(Reporting By Martinne Geller in New York; Editing by Lisa Von Ahn and Gunna Dickson)