UPDATE 4-Blackstone reports loss, but sees markets thawing

(Adds analyst quotes, paragraphs 2-3, details of other buyouts still to close, paragraph 7, updates share price)

By Megan Davies

NEW YORK, May 15 (Reuters) - Private equity company Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz) reported a first-quarter loss on Thursday as it cut the value of its investments, but said it saw signs of recovery in the markets and in banks' ability to lend for deals.

Its 6-cent loss per share missed analysts' expectations but Blackstone's stock closed up 5.3 percent at $20.54.

"The focus hadn't been on the number," said Matthew Fischer, analyst at Deutsche Bank. "What investors wanted to see was sustained asset growth, some insight into what they were investing in and the outlook. It's not a stock you hold short term."

"The 'miss' is all related to mark-to-market, unrealized losses that are transitory in nature and that are seemingly on good assets that are going to reverse," Fischer said.

Blackstone, which has taken part in some of the largest leveraged buyouts ever, like the $23 billion purchase of Equity Office Properties Trust, suffered along with the rest of the private equity industry as last summer's credit crunch froze the debt markets to large leveraged buyouts.

But Chief Executive Stephen Schwarzman saw signs of thawing. "Since the quarter end, markets have stabilized and we have even seen signs of recovery and improvement," Schwarzman said on a conference call.

"Banks that had been holding close to $400 billion of leveraged loans, are now down to $140 billion and much of that is tied to a few large transactions that are pending," Schwarzman said, citing the $17.9 billion buyout of Clear Channel Communications (CCU.N: Quote, Profile, Research, Stock Buzz), the $34.1 billion takeover of BCE Inc (BCE.TO: Quote, Profile, Research, Stock Buzz) and the $6.1 billion acquisition of Penn National Gaming Inc (PENN.O: Quote, Profile, Research, Stock Buzz). Blackstone wasn't involved in those deals.