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UPDATE 1-General Mills profit estimate hit by competition, higher spending

* Estimates third-quarter adjusted earnings/share $0.61-$0.62 vs est $0.68

* Expects sales and operating profit to reflect 1 pct lower volume

* Shares fall 2.8 pct premarket

(Adds details, background, share reaction)

March 14 (Reuters) - U.S. packaged foods group General Mills Inc warned third-quarter earnings would fall below analysts' expectations as it faces increased competition from store brands and spends more on marketing its yogurts.

Shares of the company, known for its Yoplait yogurt, Cheerios cereal and Haagen-Dazs ice cream, fell as much as 2.8 percent in premarket trading on Friday.

General Mills has been battling increasing competition from cheaper private label foods as shoppers look for bargains amid lingering economic uncertainty.

The company, which also makes Betty Crocker dessert mixes, said sales and operating profit for the third quarter ended Feb. 23 will reflect about 1 percent lower volume. It noted that the decline was in line with recent food industry trends in developed markets.

General Mills said it expects adjusted earnings of 61-62 cents per share for the third quarter.

Analysts on average expect a profit of 68 cents per share, according to Thomson Reuters I/B/E/S.

The company also said it expects third-quarter operating profit for its U.S. retail business, its largest by revenue, to be 10-11 percent below year-ago results.

General Mills, which reaffirmed its adjusted earnings forecast for the year, will report third-quarter results on March 19.

The company's shares, which have risen about 10 percent in the past year, were trading at $49.70 before the bell.

(Reporting by Maria Ajit Thomas in Bangalore; Editing by Saumyadeb Chakrabarty)