*

Global sales down 1.5% in third quarter, biggest drop in

four

years

*

Profit of $3.23/share beat estimates of $3.20/share

*

McDonald's paused serving Quarter Pounders on E. coli

concern

last week

*

Shares down 2.4% premarket after results

(Updates shares)

By Savyata Mishra

Oct 29 (Reuters) - McDonald's posted a

steeper-than-expected drop in quarterly global sales, hurt by

muted demand across key markets, including Europe and the United

States where it is expected to face more weakness as the burger

giant reels from a deadly E. coli outbreak.

Shares of the company were down 2.4% before the bell on

Tuesday even as it beat profit estimates.

Global sales fell 1.5% in the third quarter, the biggest

decline in four years, compared with analysts' average estimate

of a 0.72% fall, according to data compiled by LSEG.

Last week, McDonald's temporarily paused serving Quarter

Pounders in a fifth of its 14,000 U.S. restaurants in an E. coli

outbreak that has killed at least one person. Shares declined

nearly 7% last week as infections rose to 75 people. Quarter

Pounders were being added back to the menu this week.

Slivered onions used in the hamburgers are likely to be the

source of the infection, with the Colorado Department of

Agriculture over the weekend ruling out beef patties as the

possible cause.

Customer visits in the U.S. fell 6.4%, 9.1% and 9.5%

year-over-year on October 23, 24 and 25, respectively, according

to a Gordon Haskett note. The company's conference call on

earnings is expected to focus on any fallout from the outbreak.

The outbreak likely has thrown a near term "monkey wrench"

into the U.S. sales recovery when coupled with mixed

third-quarter results, Citi analyst Jon Tower said.

The fast-food chain has been hit by slowing customer visits

across the U.S., France, UK, Middle East and China as

price-conscious shoppers looked for cheaper meals and cooked

more at home.

INTERNATIONAL MARKETS STRUGGLE

Sales in international markets fell 2.1%, driven by weakness

in France and Britain, compared with estimates of a 1.21% drop.

Weaker consumer spending in China and impacts of the Middle

East conflict have dented McDonald's business segment where

restaurants are operated by local partners, with sales dipping

3.5% compared with a 10.5% rise a year earlier.

"We believe European economies remain under pressure with

potential for softer traffic from concerns with war in the

Middle East, especially in urban markets, and some pressure on

costs from a stronger dollar," Jim Sanderson, analyst with

Northcoast Research.

Western fast-food chains such as McDonald's and Starbucks ( SBUX )

have seen boycott campaigns over their perceived

pro-Israeli stance and alleged financial ties to Israel.

U.S. comparable sales grew 0.3%, reversing the previous

quarter's drop, aided by

promotions

.

Overall sluggish demand has prompted fast-food chains

including McDonald's, Wendy's, Burger King and

Taco Bell to lean into meal bundles and limited-time

offers in a bid to revive traffic, especially among lower-income

customers.

McDonald's CEO Chris Kempczinski said the company was

focused on affordability as customers continue to be mindful

about spending.

The Chicago-based company earned $3.23 per share on an

adjusted basis, above analysts' estimates of $3.20.