By Lewis Krauskopf Aug 2 (Reuters) - Diversified manufacturer Eaton Corp reported a lower-than-expected quarterly profit on Friday and cut the top end of its full-year earnings outlook, citing slower market growth. Shares fell more than 5 percent, as the maker of electrical and hydraulic systems said quarterly sales would have declined 2 percent without the help of acquisitions. Eaton Chief Executive Sandy Cutler said the company's markets were now expected to rise only 1 percent this year compared to the company's estimate of 2 percent to 3 percent growth when 2013 began. In an interview, Cutler characterized the economic recovery in the United States as "subpar" and said that while Europe "may be flattening...we think there is little prospect of a vigorous recovery in the short-term." "We're in a world that is struggling to grow at 2 percent," Cutler said. "Those are growth rates that all of us are not used to dealing with." Cutler also said the while gross domestic product data earlier this week showed that U.S. economic growth unexpectedly accelerated in the second quarter, manufacturing industrial production was sluggish. Eaton's second-quarter net income rose to $494 million, or $1.04 per share, from $382 million, or $1.12 per share, a year earlier, when Eaton had far fewer shares outstanding. Excluding charges to integrate recent acquisitions, earnings were $1.09 per share, 2 cents below the analysts' average estimate, according to Thomson Reuters I/B/E/S. Revenue jumped 37.7 percent to $5.60 billion, driven by the company's 2012 acquisition of Cooper Industries. Analysts were looking for $5.77 billion. Excluding a 40 percent boost from acquisitions, sales fell 2 percent, Eaton said. Despite weak revenue, Eaton was able to increase its operating profit margin to 15.6 percent, from 14.7 percent a year earlier, encouraging analysts. The margin improvement stemmed from Eaton's ability to sell more advanced products with higher prices and productivity efforts that allow it to bring down costs, Cutler said. The choppy demand for Eaton's products was consistent with what rivals reported for the quarter, including delays on large capital projects by customers, MKM Partners analyst Joshua Pokrzywinski said. "The underlying story isn't broken here," Pokrzywinski said. "We've just reset some of the numbers." The company forecast 2013 earnings, excluding special items, at $4.05 to $4.25 per share, reducing the high end from $4.45. The $4.15 midpoint of the new outlook represents an increase of 5 percent over 2012. Analysts have been looking for $4.35. Eaton now expects only $350 million in core revenue growth, excluding acquisitions, this year, down from an April outlook of $900 million. It also expects $6 billion in revenue from acquisitions this year. Eaton said it was achieving cost savings from the $11.8 billion acquisition of Cooper at a faster pace than expected. It estimated those savings at $115 million this year, $25 million higher than it previously expected, and $210 million next year, $30 million more than before. The acquisition of Cooper expanded Eaton's range of electrical products, such as lighting and wiring devices, to markets ranging from mining to oil and gas and utilities. Eaton shares were down 5.1 percent to $66.37 in mid-day trading on the New York Stock Exchange. Through Thursday, Eaton shares had climbed 29 percent this year, topping a 19.7 percent increase for the Standard & Poor's 500 stock index.