UPDATE 2-Hannover Re profit hit by derivatives losses

* Q2 net profit 144 mln euros vs 163 mln in Rtrs poll

* Q2 oper. profit 204 mln vs 273 mln in Rtrs poll

* Shares down 3.5 pct vs flat Europe insurance index (Adds analyst comment, detail)

By Jonathan Gould

FRANKFURT, Aug 10 (Reuters) - Derivatives losses prompted Hannover Re to miss analysts' expectations for second-quarter net profit, sending shares in the world's third-biggest reinsurer down 4 percent on Friday.

The company said it still expected a "good" result for the full year, but again refrained from giving a fixed forecast in view of the possible initial public offering of its parent company, insurer Talanx.

Quarterly net profit fell 13 percent to 144 million euros ($177.25 million), missing the 163 million euro average in the Reuters poll, hit by a drop in the value of unrealised derivative and inflation swaps.

"Movements in unrealised gains and losses were highly volatile. While this item showed a gain of 84.6 million euros in the first quarter, a loss of 81.6 million euros was booked in the second quarter," Hannover Re said.

Chief Financial Officer Roland Vogel said derivatives had had a positive effect on results so far in the third quarter.

The company said it was pleased with its first-half performance overall in life and non-life reinsurance, as well as its investment income, despite difficult capital markets.

"We've had a very normal result, after a long period of results affected by special effects," Vogel said.

In a telephone conference with journalists, Vogel sidestepped repeated efforts to pin the company down on a full-year profit forecast.

Hannover was expected to post net profit of 741 million euros ($912.1 million) in the full year, the average of 13 forecasts in a Reuters poll of banks and brokerages showed ahead of the second-quarter results.

It had already earned 405 million by the end of June and also has an as-yet unused buffer for natural catastrophe damage claims of around 430 million euros that could help plump the bottom line, but Vogel remained cautious in view of the Atlantic hurricane season, which typically peaks in the third quarter.

Ahead of Friday's market opening, Hannover Re's shares had risen by about 30 percent since the start of the year, outpacing major reinsurance competitors and the STOXX Europe 600 insurance index, which is up 17 percent over the same period.

It was trading at a multiple of 8.0 times 12-month forward earnings, a premium to global market leader Munich Re at 7.6 times, according to Thomson Reuters StarMine, which weights analysts' forecasts according to their track record

"Hannover has been an excellent performer year-to-date," said Canaccord Genuity analyst Ben Cohen in a note to clients.

"These are high multiples by historic standards, and in the context of non-life reinsurance pricing stabilising, and a likely reduction in earnings on today's results, we lower our recommendation from Buy to Sell," Cohen said.

Hannover Re's shares fell 3.5 percent to 47.79 euros by 0916 GMT, lagging flat STOXX insurance index. ($1=0.8124 euros) (Reporting by Jonathan Gould; Editing by Helen Massy-Beresford)