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Cuban cigar sales up as China, Middle East light up

* China becomes third largest customer

* Anti-smoking laws hitting sales

HAVANA, Feb 21 (Reuters) - Cuban cigar sales rose 2 percent in 2010 as smokers in China and the Middle East helped counter the effects of anti-smoking laws sweeping the globe, Cuban cigar executives said on Monday.

They said China climbed over Germany to become the third largest market behind Spain and France for Habanos S.A., the worldwide distributor of Cuban cigars, which generated $368 million in sales last year.

Cigar revenues are an important source of foreign exchange for cash-strapped Cuba.

In response to anti-smoking laws that are limiting places where smokers can indulge, Habanos is offering types of smaller cigars that take less time to smoke, Habanos marketing director Ana Lopez said at a news conference opening the company's annual cigar festival.

"We're trying to offer a combination of new products, but smaller cigars are more important than in the past because there are fewer places to smoke and less time," she said.

Last year, Habanos tried to counter two years of falling sales by unveiling a cigar for women, the Julieta, saying it viewed women as an untapped market.

Habanos Vice President Javier Terres said Spain, the company's top market, recently enacted a tough anti-smoking law that contributed to a 30 percent sales drop in January.

Harsh winter weather was also a factor at a time when smokers are increasingly forced outside to smoke, he said. Spain also has been hit hard by the global recession.

Terres said the problems in Spain would make 2011 "a complicated year" for Habanos, which is a joint venture between Cuba and British tobacco giant Imperial Tobacco Group Plc.

Habanos dominates the market for hand-rolled, premium cigars except in the United States, where a long-standing trade embargo against the communist-led island prevents it from doing business.

The United States is the largest cigar market in the world, with annual consumption between 230 million and 250 million cigars. (Reporting by Jeff Franks; Editing by Peter Cooney)

Source: Reuters News