UPDATE 1-Savills shares rise on Asian property performance

(adds details, shares)

LONDON, May 7 (Reuters) - UK property services firm Savills (SVS.L) said on Wednesday its Asian division was performing strongly, offsetting weakness in its European unit, helping to boost its shares 3.4 percent to 278 pence in early trading.

While its British and U.S real estate brokerage businesses faced continued challenges from a lingering credit crunch, the London-based consultancy said its Asian business had shown greater resilience.

"Many of the long-term drivers which have attracted investors to Asia remain, including population growth, rapid household formation, urbanisation rates and a burgeoning middle class," Savills said in a statement.

"Occupier markets remain robust as firms continue to expand," it added.

Outside Asia, Savills said it had seen encouraging signs for a modest recovery in European property markets but deal volumes were still compressed by a lack of debt finance.

It said retailer demand for UK space was "subdued" in line with a dip in consumer confidence and that office space demand in London's City financial district had fallen significantly amid persistent banking sector job cut concerns.

Although not totally immune to the vagaries of credit market upheaval, Savills said its global consultancy, fund and property management services -- which contributed 40 percent to its 2007 profits -- remained in good demand.

Savills said its newly launched U.S division, Savills Granite, was performing in line with expectations.

(Editing by Rory Channing)

(See www.reutersrealestate.com for the global service for real estate professionals from Reuters)

(Reporting by Sinead Cruise)