UPDATE 2-Telefonica sticks to targets, ups share buyback

(Adds analyst comments)

By Sarah Morris and Robert Hetz

MADRID, Oct 13 (Reuters) - Spain's largest telecoms company Telefonica (TEF.MC: Quote, Profile, Research) reiterated its earnings targets for 2008 and 2010 and announced a 50 percent increase in its share buyback programme, saying it had financial strength and flexibility.

The upbeat outlook from Telefonica, Europe's second-largest telecoms operator after Vodafone (VOD.L: Quote, Profile, Research), comes as companies across the globe are struggling to refinance debt as the credit crunch bites.

At 1155 GMT, Telefonica's shares were up 6.2 percent at 14.64 euros compared with a 5.8 percent rise in the Dow Jones telecommunications index .

Telefonica's shares have fallen 35 percent so far this year on fears its business will be hit by the economic slowdown.

The company said on Monday it was on target to make net profit per share in 2010 of 2.30 euros and cashflow per share of 2.87 euros.

Telefonica said it would increase its share buyback programme by 50 percent for this year and would start the buyback immediately.

"We have already completed our share buyback plan for 2008 of 100 million shares and we are increasing it by 50 percent, by 50 million more shares," a Telefonica spokesman said.  Continued...