* Q3 like-for-like sales up 4.7 pct vs est. 2.8 pct
* Q3 like-for-like baby food sales in China up over 50 pct
* Expects 2017 recurring EPS growth to exceed 12 pct (Adds detail and background)
PARIS, Oct 17 (Reuters) - Danone reported a better-than-expected 4.7 percent rise in underlying third-quarter sales on Tuesday, helped by a strong recovery in demand for infant milk formula and water products in China.
The world's largest yoghurt maker, whose brands include Actimel and Activia, nevertheless said that challenging conditions had impacted its dairy business in recession-hit Brazil, where sales fell double-digit and Danone was currently restructuring its products portfolio.
The dairy business slightly improved in north America, where the integration of its acquisition of U.S. organic food group Whitewave was on track, although the overall sales trend remained negative.
Danone, the latest European consumer goods group under pressure from investors calling for better returns, reiterated its full-year guidance, and gave more details on this.
It now expected 2017 recurring earnings per share (EPS) growth to exceed 12 percent at constant exchange rates, having previously forecast double-digit growth.
Chief Executive Emmanuel Faber said in a statement that the quarterly performance "confirms my confidence in meeting our objectives for the year, delivering solid shareholder returns, and positioning the company for long-term sustainable growth."
Third-quarter sales reached 6.454 billion euros ($7.60 billion), with like-for-like sales growth of 4.7 percent compared to 0.2 percent in the second quarter.
The performance came above the company-compiled average of analyst estimates for 2.8 percent growth in group sales.
For 2017, Danone also reiterated it expected a "moderate" like-for-like sales growth and a "sustained" improvement on recurring operating margins on a like-for-like basis.
Danone has suffered slower growth than its rivals, which include Nestle and Unilever, largely due to weakness in its dairy business in Europe which has had to contend with slow consumption and private label competition.
Its dairy business was hit by a relatively unsuccessful Activia re-launch in Europe, while in China its baby food and waters businesses have faced regulatory issues.
Its 'Specialised Nutrition' unit, which now regroups baby food and medical nutrition products, delivered robust 17.8 percent growth in the third quarter after 5.5 percent growth in the second quarter.
This was driven by growth of more than 50 percent in demand for Danone's infant formula brands in China where the market was now growing by 10 percent, helped by a sharp rise in birth rates tied to the end of the one-child policy, a growing urbanisation and affluent middle class. The performance was also helped by a favourable year-on-year comparison.
($1 = 0.8490 euros) (Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta)