* First quarter core op. profit 720 mln SEK vs forecast 873 mln
* Sees further tough Europe market
* More upbeat on North America
By Patrick Lannin and Veronica Ek
STOCKHOLM, April 25 (Reuters) - Household appliance maker Electrolux said it hoped a recovering North American market would drive growth this year as Europe is stuck in the doldrums.
Sweden's Electrolux and bigger U.S. rival Whirlpool have cut costs and increased their exposure to faster-growing emerging markets to offset slowing growth in Europe and North America.
But U.S. demand has been picking up and Whirlpool has a relative advantage in being more exposed to the world's biggest economy, which accounts for half of its sales versus 30 percent for Electrolux.
Whirlpool reported higher-than-expected quarterly profit on Wednesday and stood by its earnings guidance for 2013 .
For Electrolux Chief Executive Keith McLoughlin, born in New York and a veteran of the U.S. industry, the main headache is Europe, where consumer caution has spread from southern states to hitherto strong markets such as Germany and Sweden.
The company now expects waning demand for appliances in the region this year, but growth of 3 to 5 percent in North America.
"We see improvements in the (U.S.) housing market... people trading up a little bit more," McLoughlin told Reuters.
He saw no improvement in Europe in the first half of 2013.
"We're hopeful that we will start to see something more positive in the second half, but we're not changing our outlook for the year for Europe," he said in a telephone interview.
Electrolux makes machines ranging from espresso coffee makers to cookers and owns brands including Frigidaire, AEG and Zanussi.
It reported core first-quarter operating profit, stripping out one-off items, of 720 million crowns ($108.60 million), down from 907 million in the same period of 2012 and below the mean forecast of 873 million in a Reuters poll.
That included a 96 percent slump in earnings from major appliances in Europe, Middle East and Africa to just 11 million crowns from 271 million, but a rise in North American appliance earnings to 457 million crowns from 131 million.
Investors focussed on Electrolux's North American outlook and its stock was up 3.6 percent by 1008 GMT at 175.6 crowns.
Electrolux's guidance was similar to Whirlpool's, although Whirlpool expected a flat rather than a declining European market and saw North America up 2 to 3 percent.
Some analysts remained cautious.
"Whilst Electrolux is a well-run company geared into a consumer/housing market recovery, we view the appliance industry as the worst end-market in our coverage and in our view Electrolux's valuation remains prohibitive," said Espirito Santo in a research note.
According to Thomson Starmine data, Electrolux is valued at 12.3 times forward 12-month earnings, higher than Whirlpool's 11.9 times earnings.
Both stocks rose in 2012 on hopes of a market recovery, but Whirlpool's gain was far greater. Since the start of 2012, Whirlpool has now gained 151 percent and Electrolux 60 percent.
Electrolux's first-quarter earnings were also hit by adverse currency movements. It blamed a strengthening of the U.S. dollar against the Brazilian real, a dollar rise versus several European currencies and a weakening of the British pound.