UPDATE 1-Westfield reaffirms 2008 forecasts

MELBOURNE, May 7 (Reuters) - Westfield Group (WDC.AX), the world's top shopping mall owner by market value, reaffirmed it expected to pay a steady distribution this year and expected earnings growth to match last year, despite the U.S. economic slowdown.

Managing Director Steven Lowy said on Wednesday although retail sales growth had declined in the United States and Britain, the quality and location of the company's malls made it relatively resilient.

The United States is a key market for the group, accounting for 44 percent of the group's net rental income last year. Occupancy at Westfield's U.S. malls fell to 92.8 percent as of the end of March from 94.1 percent in December, which it blamed on its recent acquisition of two malls near Miami, Florida and a seasonal decline.

Managing Director Steven Lowy said the group expected occupancy to follow a normal trend and rise over the year to peak in the fourth quarter.

"But it depends on how prolonged and how harsh the impact is. In the United States, at the moment I think we're holding up quite well," Lowy told analysts at a briefing.

While some U.S. retailers were closing stores, Westfield's malls were not badly affected.

Bankrupt U.S. retailer Linens 'n Things is closing 120 stores, but only one of those is in a Westfield mall. And Walt Disney Co. (DIS.N) is closing only five of the 30 stores it has in Westfield malls, Lowy said.

He said the group still expected to pay a full year distribution of 106.5 cents a security this year, and expects operational segment earnings growth to match last year's level of 6 percent, in constant currency terms.

Westfield's shares rose as much as 1.3 percent to A$18.25 after the first-quarter update, then eased to trade down 0.7 percent at A$17.87, outperforming a 0.8 percent fall in the A-REIT index .AXPJ.

Westfield said average rent from specialty stores in its U.S. malls rose 3.8 percent to $45.20 per square foot in the first quarter. Its biggest U.S. rival, Simon Property Group (SPG.N) reported a 4.3 percent rise to $37.73 in average rent in the first quarter.

Its U.S. tenants' sales grew 0.7 percent on the same quarter last year, but were down 1.5 percent over the past three months, Westfield said in a slide presentation.

Westfield, which has stakes in 118 shopping centres in the Australia, New Zealand, the United States and Britain, said average rent from specialty stores in Australia and New Zealand rose 4.8 percent, while in the UK it grew 4.1 percent.

In Australia, New Zealand and the UK, its malls were more than 99 percent occupied.

The group raised $1.1 billion last month selling bonds in the United States to help repay existing debt and does not expect to turn to equity markets in the near term.

"When you look at our capital needs going forward, it's much more debt-oriented than equity-oriented for the next period," Lowy said. ($1=A$1.05) (Reporting by Sonali Paul)