* Q2 net profit falls sharply to $20.7 million
* Beats Reuters avg estimate of $10 million
* Expects to return to profit growth in Q3
* Shares rise 8 percent, outperforms weaker sector index
(Adds shares, analyst comment)
NEW YORK/ZURICH, Oct 22 (Reuters) - Logitech, the world's largest computer mouse maker, expects to return to profit growth from the third quarter after its second-quarter net profit beat analysts' expectations.
Logitech, which also makes speakers, webcams and keyboards, posted a 71 percent drop in quarterly net profit to $21 million, but this was still ahead of the average estimate of $10 million in a Reuters poll and helped lift shares 8 percent.
"We've entered the second half of fiscal year 2010 well positioned for continued improvements in our operating performance," Chief Executive Gerald Quindlen said in a statement.
"In both EMEA and the Americas, the reset of our channel partners' weeks of supply is essentially complete. Our new products are being well received by customers and will be well represented on retail shelves for the holiday season," he said.
By 0946 GMT, shares in Logitech were trading 7.8 percent higher at 20.02 Swiss francs, while the DJ Stoxx European tech index was down 2.5 percent.
"Overall, we like Logitech for its business momentum, its exposure to structural growth trends and solid balance sheet, which allows for value enhancing measures," Credit Suisse analyst Christoph Gretler said in a note.
But Gretler said a stronger-than-expected recovery in the Christmas season was uncertain due to retailers continuing to take a cautious approach to purchasing and re-stocking as consumer spending was still under pressure in many countries.
Sales at Logitech fell 25 percent to $498 million, slightly ahead of the $479 million average forecast in the Reuters poll.
Logitech expects third-quarter operating earnings to be between $45 million and $50 million on sales within the range of $575 million to $595 million. (Reporting by Michael Erman; Additional reporting by Katie Reid; Editing by Muralikumar Anantharaman and Jon Loades-Carter)