UPDATE 1-Time Warner backs off AOL ad sales growth outlook

NEW YORK, Aug 1 (Reuters) - Time Warner Inc. (TWX.N: Quote, Profile, Research, Stock Buzz) said on Wednesday it is "stepping back" from AOL advertising sales growth expectations for this year.

Ad sales growth rates at one of the most closely watched divisions of the global media conglomerate will slow in the second half of the year, Time Warner Chief Financial Officer Wayne Pace told investors on a conference call on Tuesday.

The company had previously said AOL's ad sales would rise "at or above" U.S. industry growth rates.

AOL ad sales in the second quarter rose 16 percent, down from 40 percent in the prior four consecutive quarters.

"In the second half, we are expecting advertising revenues to increase at a rate less than that experienced in the first half of 2007, and more in line with the growth rate achieved in the second quarter of 2007 due to the shifting of advertising dollars from premium display to third-party networks," Pace said. (Reporting by Kenneth Li)