UPDATE 4-Japan woes hit Renault H1 operating profit

* Group H1 operating profit 630 mln eur, 3 pct of sales

* H1 Japan impact 150 mln eur, sees further 50 mln in H2

* Confirms auto market outlook, FCF target

* Sees 600 mln eur raw material impact in FY

* Shares rise 4.9 pct (Recasts lead, updates shares)

By Helen Massy-Beresford and Gilles Guillaume

PARIS, July 28 (Reuters) - French car maker Renault said the impact from Japanese disruption which depressed profit by a fifth in the first half would ease over the rest of the year.

Its shares rose as management's confident stance reassured the market following an unexpected slump in rival PSA Peugeot Citroen's stock on Wednesday.

The March 11 earthquake and tsunami that devastated Japan disrupted the global automotive industry supply chain after electronic component suppliers' factories were damaged.

Renault said first-half automotive operating profit took a 150 million euro ($218 million) hit, mainly as a result of lost sales. The hit would be 50 million in the second half.

Renault confirmed it expected the world auto market to grow by between 3 and 4 percent in 2011, led by emerging markets as Europe remains stable or slightly lower, and said it expected its own vehicle sales and revenue to grow compared with 2010.

It reiterated its target of automotive operational free cash flow above 500 million euros in 2011.

"Renault's first-half 2011 results were better than street expectations," JPMorgan analyst Ranjit Unnithan said in a research note. "The reconfirmed outlook is likely better than feared, especially given that PSA guided down its auto outlook yesterday."

Bernstein analyst Max Warburton said the results were "a bit better than we feared" and said the company's management had "put the best foot forward ... with reasonably confident statements about second-half sales, production and medium-term prospects."

Warburton added: "Renault reported stronger headwinds than originally expected but unlike PSA did not lower guidance."

HIGHER COSTS

PSA Peugeot Citroen's shares plunged on Wednesday after it warned its automobile division's 2011 profit would be hit by raw material costs and the impact of Japan.

By contrast, South Korea's Hyundai Motor released forecast-beating quarterly net profit on record vehicle sales and market share gains, made at the expense of Japanese rivals suffering after the earthquake.

Meanwhile Europe's biggest car maker Volkswagen AG (VOWG_p.DE) said revenue and operating profit would rise significantly in 2011 as growth in all regions helped operating profit more than double in the first half, but its shares fell on profit-taking.

Renault shares were 4.9 percent higher at 37.54 euros by 1334 GMT, while the sector index was 1.23 percent lower.

Profit at Renault's auto division took a 313 million euro hit from higher raw material prices in the first half, only partially offset by 279 million of cost savings.

Chief Operating Officer Carlos Tavares told analysts the group predicted a 600 million euro impact on automobile operating profit in 2011 from the rise in raw material costs. This was 150 million euros more than expected, he said.

Renault said group operating profit fell to 630 million euros in the first half, or 3 percent of revenue, down from 4 percent in the year-earlier period.

In the automotive division, first-half operating profit was 221 million euros, or 1.1 percent of sales, compared with 410 million in the first half of 2010, Renault said.

Revenue rose 7.3 percent in the first half to 21.1 billion euros, while net income surged to 1.25 billion from 823 million.

Chief Financial Officer Dominique Thormann told journalists income was helped by lower financial charges after Renault paid back loans including one to the French government. ($1=.6884 Euro) (Editing by David Cowell)