* Says 2010 profits will exceed this year's levels
* Sees China foreign trade improving through Q1 2010
* Looking for domestic, cross-border investments
* Alibaba shares reverse losses, up 2 pct in soft mkt (Adds analyst comment, update share price)
By Alison Leung
HONG KONG, Dec 15 (Reuters) - Alibaba.com expects its 2009 profits to beat consensus expectations, its chief executive said on Tuesday, sending shares in China's largest e-commerce company higher.
Next year's profit is also expected to top this year's level in anticipation that China's foreign trade will revive, David Wei told reporters in Hong Kong.
"The spring is definitely coming, although there may be a cold breeze in between," he said.
The average earnings forecast for Alibaba is at 1.0 billion yuan ($146.5 million) for 2009 and 1.56 billion yuan for 2010, from 17 analysts polled by Thomson Reuters I/B/E/S. The company made 1.2 billion yuan in 2008.
"I believe Alibaba could come up with an earnings surprise in the fourth quarter if they can better control operating cost," said Frank He, an analyst at BOCI Research Ltd.
Shares in Alibaba 1688.HK erased their early losses, rising as much as 2 percent following the upbeat profit and market outlook. They closed up 1.8 percent, while the broader Hang Seng Index .HSI was down 1.2 percent.
China's trade volume, which saw steep declines during the global downturn, should continue to improve into the first quarter of 2010, said Wei.
"We have over 1 million overseas buyers," said Wei. "That allowed us to correctly predict the trade situation this year."
China's foreign trade is expected to return to the 2007 level next year, Wei predicted, but added that exporters should not be overly optimistic or they might again face a situation of overcapacity.
Alibaba.com operates an online site connecting millions of buyers and sellers, competes with Global Sources (GSOL.O) in China's 1.5 billion yuan business to business (B2B) industry.
The company reported a 20 percent earnings drop for the third quarter, its worst profit in three quarters, after betting on acquisitions and product development to tap the region's early recovery from the global downturn.
As global trade improves, Alibaba.com will be on the lookout for both domestic and cross-border opportunities, said Wei. "We are looking at new investments at home as well as in overseas, from the easy to the difficult," he said.
Alibaba.com's shares have more than tripled this year on hopes that China's economy would help pull the region out of recession on the back of a 4 trillion yuan stimulus spending plan by Beijing, which has encouraged more spending through easy credit and other incentives.
But the shares have underperformed the broader Hang Seng Index for the past three months.
In September, Yahoo.com YHOO.O sold its 1 percent direct holding in Alibaba.com to take advantage of the surge in the company's share price. The No. 2 U.S. Web company still retains a nearly 40 percent stake in Alibaba.com's parent.
Alibaba.com, which last month agreed to buy a majority stake in Chinese web hosting company HiChina for $63.8 million, has said that 2009 would be a year of investment for the company as it seeks to grow beyond its home China market. ($1=6.827 Yuan) (Editing by Lincoln Feast)