UPDATE 1-Renewables help lift earnings at Italy's ERG

* Adjusted core earnings at replacement cost up 130 pct

* Q4 net profit 10 mln euros vs 17 mln euro loss

* Confirms 0.40 euros per share dividend

* Sees weaker refining margins in 2013 (Recasts lead, adds details)

MILAN, March 8 (Reuters) - Italy's ERG more than doubled its core earnings in the fourth quarter, helped by an improved performance at its renewable energy and power and gas businesses, as it shifts its focus from volatile refining.

The energy group said on Friday its adjusted core earnings at replacement cost rose 130 percent to 128 million euros ($167 million).

ERG, which expects refining margins this year to be worse than last year's average, has sold down its stake in its refinery in Sicily to Russia's Lukoil to reduce its exposure to the volatile sector.

It has an option to sell its remaining 20 percent to the Russian group in October 2013.

In February, ERG completed the acquisition of wind power assets from France's GDF Suez to become Italy's largest wind energy player and one of the top ten in Europe.

The company confirmed a target for full-year earnings before interest, tax, depreciation and amortisation (EBITDA) at replacement cost of more than 500 million euros.

It said it would pay a dividend on 2012 results of 0.40 euros per share, the same as the previous year.

($1 = 0.7644 euros) (Reporting by Stephen Jewkes; Editing by Mark Potter)