* In Brazil, volumes grow but earnings sharply down
* U.S. weak, Mexico, China, Europe strong
* Shares hit 6-month high (Updates with shares, analyst comment)
By Philip Blenkinsop
BRUSSELS, May 4 (Reuters) - The world's largest brewer, Anheuser-Busch InBev, reported higher than expected profit growth in the first quarter and said there were signs of a turnaround in Brazil, its second-biggest market, after a two-year slump.
Beer volumes finally picked up in Brazil in January to March, the brewer said on Thursday, although it had not fully passed on the cost of 2016 tax increases to consumers and sales costs rose due to a near 40 percent decline in the real against the dollar.
The maker of Budweiser, Stella Artois and Corona, which produces more than a quarter of the world's beer, said it expected cost of sales per hectolitre in Brazil to fall later in the year. Half of its sales costs in Brazil are dollar-denominated.
"We remain cautiously optimistic on Brazil overall. We expect 2017 to be better industry-wise than 2016," Chief Financial Officer Felipe Dutra told a conference call.
Dutra recognised that the U.S. beer market, the company's largest, had also performed below expectations, but also talked about the year as a turning point for the company overall.
AB InBev said overall first-quarter core profit rose 5.8 percent on a like-for-like basis, excluding currency changes and the impact of its merger last year with SABMiller. That was above the 3.3 percent foreseen in a company-compiled poll.
Its shares opened at a six-month high of 109.00 euros, and were up 4.2 percent at 108 euros by 1005 GMT, at the top of the FTSEurofirst300 index of leading European shares.
They outperformed the shares of rival Carlsberg, which were up 1.5 percent after the Danish brewer reported a better-than-expected 5 percent increase in first-quarter sales on Thursday and kept its 2017 profit forecast.
AB InBev, which sells more than twice as much beer as nearest rival Heineken following its $100 billion acquisition of SABMiller, retained its forecast of accelerated revenue growth this year.
Morgan Stanley said in a note that the brewer's first-quarter results were a relief after a tough 2016 and represented an inflection point with year-earlier comparisons easier for the rest of 2017.
CFO Dutra said the North American beer market had performed below expectations, but was comparing with a leap year and an earlier Easter in 2016.
In the United States, AB InBev saw lower volumes as Bud Light and Budweiser both lost market share. Profit also slipped although the margin increased with strong sales of higher-priced Michelob Ultra, Stella Artois and craft beers.
Among the positives were increased volumes and earnings in Mexico, a huge expansion of margins in South Africa, one of its new markets, higher earnings in Europe and a strong start to the year in China.
AB InBev also reported further cost savings of $252 million from its integration with SABMiller.
"It's very much a mixed picture," said Trevor Stirling, analyst at Bernstein Securities, citing weakness in Brazil an the United States. "On the other hand the synergies are coming through." (Reporting By Philip Blenkinsop; editing by Robert-Jan Bartunek and Susan Fenton)