* Q1 organic growth 1.3 pct vs consensus 2.9 pct
* Publicis targets 3.2-3.6 pct organic sales growth in 2013
* Publicis shares fall more than 5 pct
* CEO Levy sees improvement later this year in Europe
PARIS, April 15 (Reuters) - Advertising group Publicis said it expected the European market to recover later this year after posting weaker-than-expected underlying revenue growth in the first quarter, sending its shares sharply lower.
The group, which had in February warned that 2013 would be difficult in Europe, said it had been hit by a sharp advertising slowdown across the continent. Spending by pharmaceutical companies was especially weak.
Organic sales growth, which adjusts for currency impact and acquisitions, was 1.3 percent in the first quarter, a slowdown from 3.9 percent in the fourth quarter of 2012 and short of an average market expectation of 2.9 percent.
Publicis, which competes with WPP and Omnicom , nevertheless maintained relatively bullish forecasts for the year, saying it aimed for organic growth in 2013 of between 3.2 and 3.6 percent and for margins to improve.
"I think things will improve in Europe, particularly in the second part of the year," Chief Executive Maurice Levy said, describing the first-quarter downturn in Europe as worrying but not unexpected.
Sales were especially weak in traditional, non-Internet advertising. Revenue fell by 13.1 percent in Spain, 11.3 percent in France, 6.1 percent in the UK and 4.8 percent in Germany.
China and the United States remained strong, however, posting 15.2 percent and 4.4 percent organic growth respectively.
Levy said he expected the group's first-quarter performance in the United States to be a good indication of what would happen for the rest of the year. North America accounts for roughly half of group revenue.
Shares in Publicis, which is the third-biggest global advertising agency by sales, closed 5.17 percent lower at 51.56 euros. It was the biggest faller in the French blue-chip CAC 40 index which was down 0.5 percent overall. The shares touched a 13-year high of 56.66 euros on April 4.
Bernstein Research's Claudio Aspesi said Publicis' difficulties this quarter would not translate into a poor year overall, pointing out that the 2012 comparisons for the first quarter were particularly challenging.
"We do not expect this quarter to be representative of 2013 as a whole and do not think it should be cause (for) excessive concern," Aspesi wrote in a note.
WPP, the world's biggest ad agency, is expected to publish first-quarter results on April 26. Its shares were down 3.5 percent on Monday.
UBS analyst Tamsin Garrity wrote in a note that the WPP sell-off was overdone, in part because the British-based group relied less on the pharmaceutical sector for sales than Publicis.