UPDATE 2-Dufry bets on Greek tourism with duty-free deal

* To pay 200.5 mln eur for 51 pct stake in duty free ops

* Deal is one of the first since debt crisis erupted

* Dufry CEO says has contingency if Greece exits euro

(Adds Dufry CEO quotes) By Karolina Tagaris

ATHENS, Oct 10 (Reuters) - Swiss retailer Dufry isto buy the duty-free operations of Greek rival Folli Follie, a rare vote of confidence in an economy deserted byother foreign companies concerned over its future in the euro.

The 200.5 million-euro ($258.6 million) deal is a bet ontourists continuing to flock to Greece, despite a deep economicrecession and social unrest.

While tourist revenues are expected to fall in thedebt-laden southern European country this year, they are holdingup much better than in other sectors.

"Greece is expected to remain an attractive touristdestination, irrespective of the current situation of theeconomy," Dufry Chief Executive Julian Diaz said on Wednesday.

The Switzerland-based global travel retailer is buying a 51percent stake in Folli's duty-free operations, which include anetwork of more than 100 shops at 46 locations across thecountry. Dufry has the option to buy the remaining stake in fouryears' time.

The deal bucks a trend of some foreign companies pullingtheir operations from Greece, which is being kept afloat byloans from the International Monetary Fund and European Unionand whose future in the euro zone remains at risk.

Struggling to cope with falling demand in one of Europe'smost indebted countries, Carrefour , Europe's biggestretailer, announced its exit from Greece in June. French lenderCredit Agricole has sold its struggling Greek unit andSociete Generale is poised to do the same.

Diaz said more than 80 percent of the sales of Folli'sduty-free operations were generated with internationalcustomers, making it "de facto an international business locatedin Greece."

"I believe (the transaction) ... represents another big stepforward in our strategy to consolidate the fragmented travelretail industry," he added.

Asked on a conference call whether he was concerned aboutthe possibility of Greece leaving Europe's single currency, Diazsaid: "Of course I am and we obviously have specific plans."

Contingency plans were in place regarding the movement ofcurrency, the protection of the gross profit margin and how todeliver merchandise, he added.

Greece's tourism industry accounts for around one in fivejobs in the country. Its revenues are expected to decline 5percent this year, with more than 16 million tourists visitingthe country's sun-drenched islands and ancient monuments,slightly below a record 16.5 million last year.

Folli, one of Greece's most successful companies, sellsjewellery and other accessories at about 800 stores in Europe,Asia and the United States. Its operating profit reached 84million euros last year, on sales of 290 million.

The company took over formerly state-owned Hellenic DutyFree Shops in 2010. Chinese private conglomerate Fosunowns 13.4 percent of Folli. ($1=0.7754 euros)

(Additional reporting by Caroline Copley in Zurich; Editing byMark Potter and David Cowell)

((karolina.tagaris@thomsonreuters.com)(+30 210 3376438)(Reuters Messaging:karolina.tagaris.thomsonreuters.com@reuters.com))