UPDATE 1-Microsoft ups Surface production, to sell in more stores

* Exec sees "exciting" reaction from consumers

* Staples to sell Surface from Wednesday

SEATTLE, Dec 11 (Reuters) - Microsoft Corp said on Tuesday it has stepped up manufacturing of its Surface tablet, its new device designed to counter Apple Inc's iPad, and will introduce it to third-party retailers this week.

The world's largest software company, which alone has sold the Surface since launch in late October, also said it was keeping its chain of 'pop-up' holiday stores open into the new year and may convert them into permanent retail outlets.

The move suggests Microsoft is seeing some demand for its first own-brand computer in the crucial holiday shopping season, although it has yet to divulge any sales figures.

"The public reaction to Surface has been exciting to see," said Panos Panay, general manager of Microsoft's Surface project, which forms part of the company's Windows unit.

"We've increased production and are expanding the ways in which customers can interact with, experience and purchase Surface," said Panay, but gave no details of how many extra units were being produced.

Panay did not mention names of retailers that will sell the Surface, but separately office equipment retailer Staples Inc said it would stock the Surface from Wednesday.