UPDATE 2-Lear Corp net falls 18 pct on weak European business

* European sales fall 16 percent

* North American sales up 15 percent

* Shares rise 1.4 percent in morning trading

Aug 2 (Reuters) - Lear Corp's second-quarter earnings fell 18 percent on weak business in Europe, the supplier of auto seats and electric power management systems said on Thursday.

But adjusted earnings topped Wall Street estimates, and Lear shares were up 1.4 percent in late-morning trading.

Sales in Europe were down 16 percent to $1.29 billion, while North American sales rose 15 percent to $1.47 billion. Sales in Asia climbed 8 percent to $614.6 million.

"The quarter highlights Lear's relatively stable business profile," said Citi Research analyst Itay Michaeli, who recommends a "buy" of Lear stock.

Net income dropped to $145.4 million, or $1.45 per share, from $177.5 million, or $1.65 per share, a year earlier.

Excluding one-time items, Lear earned $1.35 per share, 7 cents above analysts' average forecast, according to Thomson Reuters I/B/E/S.

Net sales were $3.665 billion, little changed from $3.676 billion a year earlier.

Sales in Lear's seating business fell 2 percent to $2.8 billion, pressured by the negative impact of foreign exchange rates. Sales in its electric power management systems business rose 7 percent to $872 million, boosted by the addition of new business that offset negative foreign exchange rates.

Margins in both business segments are expected to be 6.5 percent to 7 percent in 2012. In 2011, the seating business margins were 7.2 percent and the power systems 5.9 percent.

Chief Executive Matt Simoncini told analysts on a conference call that Lear continues to look for "niche" businesses to acquire, particularly in emerging markets.

None of the companies Lear is eyeing are formally for sale, he said, but Lear is in regular contact with possible targets.

STOCK REPURCHASE

In the quarter, Lear repurchased 1.8 million shares of its common stock at $39 per share. Lear said it returned $84 million to shareholders in the second quarter through stock repurchases and dividends.

The company forecast full-year revenue of $13.9 billion to $14.4 billion, up from a May forecast of $13.85 billion to $14.35 billion.

The forecast assumes auto industry production of 16.7 million vehicles in Europe, down 2 percent from its previous guidance, and 14.9 million vehicles in North America, a 4 percent gain from its previous guidance.

Lear's $257 million acquisition of Guilford Mills, maker of automotive and specialty fabrics, was completed in May. Simoncini said the integration of Guilford Mills was "well under way."

Lear said profit margins at the Guilford Mills business are expected to be in line with the 6.5 percent to 7 percent margins forecast for the remainder of 2012 for the full company.