UPDATE 1-Kerry sees slower earnings growth, stable markets

* Adjusted EPS up 11 pct, beats expectations

* Challenging Q3 slowed down revenue growth

* Sees solid 2012 improving as the year goes on (Adds detail, quotes)

DUBLIN, FEB 21 - Irish food group Kerry expects earnings to grow 7-10 percent this year, a touch less than in 2011 as it frontloads investments and awaits a stabilisation in the global economy.

Kerry said on Tuesday adjusted earnings per share rose 11 percent to 2.13 euros in 2011, at the top of its own range and compared with a forecast for 2.11 euros in a Reuters poll.

Ireland's third-biggest listed company by value saw revenues grow 7 percent to 5.3 billion euros, primarily driven by its ingredients and flavours business which accounted for over two-thirds of all sales.

Like-for-like revenues were further ahead of 2010 half way through the year, but chief financial officer Brian Mehigan said a very challenging third quarter temporarily put the brakes on.

"We were really going well through the year until August when things started going pearshaped in the markets and inflation accelerated, and that does feed through to people's confidence," Mehigan told Reuters in an interview.

"That seemed to abate a bit in Q4. We see 2012 being solid and probably improving as the year goes on... I think food price inflation will moderate, that'll be good for the consumer and as hopefully the world stabilises, we will see a pick-up as we go through the year."

Kerry is targeting EPS growth of over 10 percent per year over the next five years and Mehigan said it would achieve this on an underlying basis in 2012 but that increased investment on technology led to the lower guidance on a reported basis.

He said the group, which makes just 10 percent of its revenue in its home market of Ireland, would match or exceed its 2011 Research and Development spend of 167 million euros this year but does not see it investing as much in subsequent years.

Shares in Kerry, whose consumer foods division produces Wall's sausages and Cheesestrings snacks, were 1 percent lower at 30.8 euros by 0840 GMT.

"In the context of slowing food markets in advanced countries as regards volume and input cost inflation, and specifically in light of a mixed food sector reporting season to date, the Kerry result is very robust," John O'Reilly, analyst at Davy Stockbrokers, wrote in a note. (Reporting by Padraic Halpin; Editing by Hans-Juergen Peters)