UPDATE 2-Westfield buoyed by rising mall income at home

* Australian mall income, sales still growing

* Confirms 2009 earnings forecast at 94-97 cents a share

* Sees no fire sale of General Growth malls soon

* Shares up 2.8 pct (Adds Westfield, fund managers' comments, details)

By Sonali Paul

MELBOURNE, April 30 (Reuters) - Westfield Group (WDC.AX), the world's biggest shopping mall landlord by market value, stood by its full-year forecasts as rental income in Australia offsets tough conditions abroad.

In the United States, recession has forced retailers to shut stores and sent mall owner General Growth Properties GGP.N into bankruptcy, but Westfield has been shored up by its malls at home where rental income and sales are growing, and it is positioned to pounce on distressed assets.

"Australia has continued to be a strong point of the whole portfolio, and we would expect that relative strength to continue," said Stephen Hiscock, managing director of fund manager SG Hiscock & Co.

But Westfield, which last year opened Europe's biggest city centre shopping mall in London's White City, said it did not expect General Growth to flood the market with asset sales.

Westfield kept its forecasts for operational segment earnings and full-year distribution to fall to 94-97 cents a share this year, implying a fall of up to 6 percent in earnings and up to 12 percent in its distribution.

Westfield shares rose as much as 3.7 percent and last traded up 2.8 percent at A$10.90, slightly ahead of the broader market .AXJO.

"Westfield is a well capitalised business, operating good malls. So I think that the duress is going to be felt more by competitors," said Andrew Parsons, managing director of property trust investor Resolution Capital.

NO FIRE SALE

Analysts have speculated that Westfield and top U.S. mall owner Simon Property Group (SPG.N) would swoop on some of General Growth's prized shopping centres as it tries to pay down debt.

But Westfield co-managing director Peter Lowy said second-largest U.S. mall owner General Growth's bankruptcy was so complex it could take as long as three years to play out.

"Looking at some of the commentary made and looking at the market place, we don't expect a flood of assets coming out of General Growth onto the market in the near future at all," Lowy told analysts at a briefing.

As a result, the group does not expect General Growth's woes to hurt asset values, which he said were "pretty steady".

Co-managing director Steven Lowy said that while consumer sentiment was still weak in Australia, Britain and the United States, it appeared to be improving.

"Given that sales generally lag sentiment, this should be an early positive sign," he said.

Net operating income growth in Australia, which makes up 45 percent of the group's income, was likely to come out at the top end of its forecast range of 3-4 percent, while in the United States, it was likely to land at the lower end of its forecast for a decline of 2-3 percent in 2009, he said.

In Australia and New Zealand, its 56 malls, including Bondi Junction in Sydney, remain nearly fully occupied. A big advantage Westfield has over its U.S. peers, is that malls in Australia are anchored by supermarkets, which are still thriving.

Occupancy at its 55 U.S. malls fell to 90.1 percent from 92.6 percent at the end of last year.

"Overall leasing conditions in the U.S. are very challenging," Steven Lowy said.

Peter Lowy said he was not worried that General Growth might slash rents to keep its malls occupied, hurting rivals.

"We're in probably a better position to compete because we're not as capital constrained," he said.

Westfield beefed up its capital position in February raising A$2.9 billion ($2 billion) in a share sale and putting new projects on hold. ($1=1.424 Australian Dollar) (Additional reporting by Eriko Amaha in Sydney) (Editing by Ian Geoghegan)