UPDATE 1-Taubman Centers 1st-quarter FFO rises

* FFO up 3.8 percent

* Occupancy falls

* Shares trade down slightly in after-hours activity

NEW YORK, April 29 (Reuters) - Taubman Centers Inc (TCO.N), a luxury mall owner and developer, said quarterly funds from operations (FFO) rose 3.8 percent, boosted by income from lease cancellation fees and easily beating Wall Street's forecast.

Taubman posted a first-quarter FFO of $37.8 million, or 70 cents per share, compared with FFO of $36.4 million, or 68 cents per share, in the year-earlier quarter.

Analysts had expected FFO of 58 cents per share, according to Reuters estimates.

The quarterly FFO, a performance measure for a real estate investment trust, includes a $2.5 million charge related to job cuts.

Excluding the charges, Taubman posted FFO of $39.4 million, or 73 cents per share.

The luxury retail market has been pummeled as the recession brought layoffs at banks and hedge funds. The average sales per square foot fell 13.5 percent.

At the end of the quarter, occupancy rate fell to 88.6 percent from 89.9 percent a year earlier, due to the bankruptcy closing in late 2008 of three big box store locations at the company's value centers.

Taubman maintained its forecast of full-year 2009 FFO of $2.69 to $2.94 per share and $2.72 to $2.97 per share, excluding restructuring charges.

Taubman shares traded at $22.78, slightly down from their close of $22.84 on the New York Stock Exchange. (Reporting by Ilaina Jonas; Editing by Steve Orlofsky)