UPDATE 3-Anglo posts weaker Q1 output, iron ore jumps

* Refined platinum output down 5.8 pct, iron ore up 22 pct

* Diamond production plunges 90.8 pct

* Balance sheet strengthened

* Shares up 3.5 pct, tracking mining index

(Adds analyst comment, shares)

By Eric Onstad

LONDON, April 30 (Reuters) - Mining group Anglo American Plc (AAL.L) posted weaker first-quarter output in most of its commodities, including a 90 percent plunge in diamond output, as it trimmed production amid weak prices. [ID:nLT372236]

The declines for Anglo, the world's fourth-biggest diversified miner by market value, were mostly expected and followed similarly weak production reports from rivals BHP Billiton (BLT.L) (BHP.AX), Rio Tinto (RIO.L)(RIO.AX) and Vale (VALE5.SA) (RIO.N). [ID:nSYD457955] [ID:nLF163012]

Mining groups have temporarily closed a swathe of loss-making mines after metals prices collapsed due to a sharp drop in demand from sectors ranging from autos to building.

"Anglo 1Q09 production numbers out this morning were on the low side, but understandable given the tough operating environment. On average the main commodities were 6 percent below our expectations," said analyst Tim Huff at RBS.

Cazenove said in a note that production was largely as forecast, but reiterated its "in-line" rating since Anglo's valuation was at a premium, trading at a price earnings ratio of 10.8 for 2010 versus about 9.0 for its peers.

Anglo shares, which have underperformed the UK mining index .FTNMX1770 by 30 percent this year, gained 3.5 percent to 1,493 pence by 0734 GMT, largely in line with the index.

IRON ORE JUMPS

Iron ore production, which has been one of the group's main profit drivers, swam against the tide and jumped 22 percent due to an expansion at South African unit Kumba (KIOJ.J).

The group warned, however, that the situation was fluid and Kumba could also pull back due to the economic downturn.

"Kumba continues to monitor stock levels and market developments and, should conditions deteriorate, production cuts will be considered," a statement said.

Anglo said refined platinum output at Anglo Platinum (AMSJ.J) fell 5.8 percent and it stuck with its full-year output target of 2.4 million ounces.

Iron ore is part of Anglo's Ferrous Metals division, which accounted for 27 percent of 2008 operating profit while Base Metals, which includes copper, made up 24 percent and platinum 22 percent.

Quarterly copper production declined by 5.4 percent.

De Beers, the world's biggest diamond producer 45 percent-owned by Anglo, has been hard hit by the weak economy and recovered 90.8 percent fewer diamonds after shutting down the bulk of its mines.

Anglo -- the world's dominant platinum producer and fourth-largest iron ore exporter -- said it had strengthened its balance sheet after issuing $3.7 billion in bonds and had undrawn bank facilities and cash of over $9 billion.

"Anglo American has taken a series of proactive measures in response to the current economic environment and is positioned strongly to weather those conditions," it said.

On Feb. 20, Anglo scrapped its 2008 final dividend to conserve cash and said it would cut 19,000 jobs as it posted a weaker-than-expected 1 percent fall in annual profit. [ID:nLJ278974]

The group, which has raised a further $1.7 billion from selling its remaining stake in AngloGold Ashanti (ANGJ.J), had $11 billion in net debt at the end of last year, representing a gearing level of 38 percent. (Reporting by Eric Onstad; Editing by Jon Loades-Carter and Simon Jessop)