July 30, 2010 –   * Shares up 4.4 pct to about two month intraday high

* Lifts annual outlook and posts surprise Q1 profits

* Demand booming for Bravia flat TVs and PlayStation 3

* Strong yen, tough competition, Europe woes remain risks

TOKYO, July 30 (Reuters) - Sony Corp shares gained more than 4 percent to their highest intraday level in nearly two months after the company lifted its annual outlook on booming demand for its Bravia flat TVs and PlayStation 3 game consoles.

Sony, the world's second-largest camera maker after Canon Inc and the No. 3 maker of flatscreen TVs after Samsung Electronics and LG Electronics, also returned to profit in the first quarter, surprising investors who expected a quarterly loss.

"Earnings were above expectations for almost all electronics products, with volumes/prices above expectation for LCD TVs and PCs, and cost cuts strong in digital cameras and camcorders," Goldman Sachs analyst Takashi Watanabe wrote in a note to clients.

"We think LCD TV/PC strength was due more to the Sony brand than industry factors and expect volumes and prices to remain strong from Q2 on."

For the year to March 2011, Sony lifted its operating profit outlook by 12.5 percent to 180 billion yen ($2.1 billion), compared with a consensus estimate of 152.6 billion in a poll of 22 analysts by Thomson Reuters I/B/E/S.

The yen's persistent strength and tough competition with South Korean rivals such as Samsung Electronics and LG Electronics remain key risks.

It is also keeping a wary eye on the impact of the debt crisis on European demand, which accounted for more than 25 percent of Sony's sales last year.

The electronics and entertainment giant reported April-June operating profit of 67 billion yen versus the consensus for a 13 billion yen loss in a poll of four analysts and a loss of 25.7 billion yen a year ago.

Sony shares were up 4.4 percent at 2,727 yen, against a 1.3 percent fall in the benchmark Nikkei average. (Reporting by Sachi Izumi and Elaine Lies; Editing by Joseph Radford)