UPDATE 1-Yum China sales up in February amid turnaround, shares jump

March 11 (Reuters) - KFC parent Yum Brands Inc on Monday reported an unexpected 2 percent rise in February sales at established restaurants in China, its top market, as it recovers from a steep business decline sparked by a food safety scare there late last year.

The average of three analyst estimates was for a decline of 8.7 percent in February, according to Consensus Metrix.

Shares in Yum jumped 7 percent in extended trading to $72.55, their highest level since November.

Yum also reported a 20 percent drop in first-quarter same-restaurant sales for China, which was less steep than its prior forecast for a 25 percent decline.

Yum's February results included flat same-restaurant sales at KFC and 13 percent growth at Pizza Hut Casual Dining.

The company said the timing of Chinese New Year boosted last month's results and the overall impact of the holiday was neutral for the first quarter, which includes only January and February.

The fast-food operator reaps more than half of its overall sales in China, where most of its nearly 5,300 restaurants are KFCs. It does not normally report monthly China sales results, but is doing so while it works to turn that business around.

Yum last month said it expected KFC same-store sales in China to turn up by the fourth quarter.

The February results "would seem to imply that the recovery is potentially going to be faster than what we thought," Bernstein Research analyst Sara Senatore said.

Diners in China started cutting back on visits to Yum's restaurants in December after news reports and government investigations focused on chemical residue found in a small portion of its chicken supply.

Yum was not fined by food safety authorities.

The company has apologized for the chicken incident, vowed to end ties with smaller poultry suppliers that have not modernized their operations and pledged to further tighten its food safety procedures.