* Q1 like-for-like sales seen up 6.8 percent
* Pricing key to offset higher input costs
* Expected to reiterate annual targets
LONDON, April 14 (Reuters) - French food group Danone is set to post strong first-quarter sales growth on Thursday helped by higher prices and a recent deal in Russia, with the focus on how it handles rising commodity costs.
The world's largest yoghurt maker with brands like Actimel and Activia is expected to show like-for-like sales growth of 6.8 percent in the first three months of 2011 according to both a Reuters poll of 14 analysts and a company-compiled consensus.
The Paris-based group, which also owns Badoit and Evian bottled water and Bledina babyfood, is faced by rising commodity costs, especially milk, but is confident it can offset these pressures by higher prices and internal cost savings.
Analysts say the key will be what effect price rises will have on sales volumes with austerity measures in many western European nations crimping consumer spending and some emerging markets showing signs of a slowdown in growth.
With fresh dairy products accounting for nearly 60 percent of sales, analysts said Danone's comments on milk costs and its ability to raise its prices will be closely watched.
"We believe Q1 could surprise positively as pricing starts to come through and yet consumer habits tend to be 'sticky' and hence downtrading may take a while to occur," said analyst Sara Welford at brokers Citi.
Danone has already said the first quarter had started in the same positive way as 2010 finished when fourth-quarter sales rose 6.9 percent, and also has said input cost increases will be at the top of its previous 6-9 percent range for 2011.
Analysts expect the group to confirm its target of 6-8 percent like-for-like sales growth for 2011 and operating margins up 0.2 percent at 15.4 percent helped by its dairy products merger with Russia's Unimilk completed at end-November.
Overall group sales at Danone are expected to rise 16.7 percent to 4.64 billion euros, according to the Reuters poll. (Reporting by David Jones; Editing by Jon Loades-Carter)