UPDATE 1-Italy's L'Espresso sees fall in 2008 profits

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MILAN, April 17 (Reuters) - Italian media group L'Espresso (ESPI.MI) forecast a fall in profit this year due to a weakening economy, as it reported a 22.4 percent drop in its net profit for the first quarter on Thursday.

Italy's ailing economy curbed spending by advertisers in the first months of 2008, hurting a key source of revenues at the group that publishes daily newspaper La Repubblica.

On Wednesday, Italy's biggest private broadcaster Mediaset (MS.MI) said domestic advertising revenues rose around 3 percent in the first quarter, signalling a possible slowdown in sales in March after reporting a 5 percent growth for January-February.

The International Monetary Fund (IMF) has slashed its forecast for Italy's 2008 growth to 0.3 percent.

For the quarter, L'Espresso said total revenues fell 3.7 percent to 262.3 million euros ($418.6 million) despite the good performance of optional products sold together with dailies and magazines.

Advertising sales fell 3 percent after a nearly 13 percent drop in March offset a positive start to the year.

"Projections for April and May actually show a recovery and an increase in revenues vis-a-vis the corresponding months of 2007," it said in a statement.

"In any case the (deteriorating) macroeconomic framework ... will entail a decrease in 2008 financial results."

L'Espresso said net profit fell to 10.5 million euros ($16.76 million) compared with 13.5 million euros in the same period of 2007.

By 1022 GMT, shares in L'Espresso lost 1.36 percent to 2.465 euros, underperforming a 0.56 fall in the DJ Stoxx index of European media companies .SXMP.

In 2007, the group's net profit fell 7.7 percent to 95.6 million euros.

(Reporting by Valentina Za; Editing by Andrew Hurst)