UPDATE 2-Imperial Tobacco sees success in rolled cigarettes

* Company sees in-line full-year after good Q3

* UK mkt decline slows, people buy fewer cigarettes abroad

* Volume, market share grows in Asia

* Shares down 1.7 percent

(Recasts, adds market breakdown, shares)

LONDON, July 23 (Reuters) - Imperial Tobacco Group Plc (IMT.L), the world's No.4 cigarette group, said it was benefiting from recession-hit smokers using its cheaper products to roll their own cigarettes and more growth in emerging Asian markets.

The British maker of Lambert & Butler, West and Gauloises cigarettes said on Thursday it had a good performance in the third quarter and was on track to meet its expectations for the full year to Sept. 30.

"The versatility of our balanced portfolio is enabling us to benefit from the growth in value cigarette and fine cut tobacco brands in mature markets, whilst continuing to develop our mainstream and premium cigarette brands in emerging markets," Chief Executive Gareth Davis said in a statement.

In the United Kingdom, where it has a 45.3 percent share of the cigarette market, Imperial Tobacco said the market decline had slowed because customers were buying fewer cigarettes from abroad as the weak economy and strong sterling resulted in people travelling overseas less.

In France, cigarette volumes rose 2 percent as the market started to recover from a smoking ban in public places introduced a year ago.

LOOSE TOBACCO BUOYANT

In the UK and Spain, sales of fine cut tobacco, used to make cheaper "roll-ups", rose sharply, with volumes in the UK up 15 percent for the 12 months to June and volumes in Spain up 44 percent in the nine months to June.

The downtrading to loose tobacco was also seen across Europe, resulting in good volumes for these products in other European markets, Imperial Tobacco said.

Cigarette volumes in markets such as Ireland, Poland and the Czech Republic suffered, however, as customers took trips across borders to buy cigarettes following duty increases.

In its Rest of the World division, which includes fast-growing emerging markets such as Cambodia and Laos, sales volumes and market shares grew, with its Davidoff and Gitanes cigarette brands putting in a particularly strong performance.