* Cites weakness in U.S., Canada post Thanksgiving

* Sees FY11 rev increasing 7 pct from $4 bln last year

* Sees FY11 EPS growing 2-4 pct from $2.74 last year

* Shares rise as much as 2 pct

By Ranjita Ganesan

Jan 17 (Reuters) - Hasbro Inc forecast lower-than-expected sales for the holiday quarter citing weak demand in the United States and Canada post Thanksgiving, but the stock rose slightly as the miss was not as big as investors had feared.

This is the second straight quarter of weak North America sales for Hasbro, which has also posted a string of lower-than-expected profits this year.

However, Wells Fargo analyst Timothy Conder kept his "outperform" rating on Hasbro's stock, saying the weak outlook was not surprising given recent domestic weakness in a range of categories, including action figures and games.

The fourth-quarter outlook mirrors Hasbro's weak sales results in the year-ago period, when demand in the U.S. petered out at the end of the holiday selling season.

"Now there is more certainty about what the holiday season looked like. It was worse than expectations but it wasn't 'awful'," Longbow Research analyst James Hardiman told Reuters.

Retailers used deep discounts on popular items such as toys and televisions to lure shoppers and overall visits to stores in the holiday shopping season fell 3.1 percent according to a firm that tracks retail traffic, hurt by higher gas prices and more cautious spending.

Hasbro, the no. 2 U.S. toymaker behind barbie dolls maker Mattel Inc, is known for its Nerf foam toys, Transformers action figures and popular Monopoly board game.

WEAK OUTLOOK

The company expects fourth-quarter revenue of $1.33 billion, while analysts were looking for $1.39 billion, according to Thomson Reuters I/B/E/S.

Hasbro projected revenue growth of 7 percent for the full year from the $4 billion it reported in 2010.

The company, set to report fourth-quarter and full-year results on Feb. 6, also expects full-year 2011 profit to increase 2 to 4 percent from the $2.74 a share it posted in 2010.

Analysts, on average, were expecting 2011 earnings of $2.87 a share on revenue of $4.35 billion.

Hasbro shares were trading up slightly at $32.79 on Tuesday afternoon on the Nasdaq.

• A Permanent Economic Emergency