Aberdeen says funds grow 6 pct

LONDON (Reuters) - Aberdeen Asset Management (ADN.L: Quote, Profile, Research) said on Friday its assets had grown 6 percent despite turbulent markets and had also earmarked higher cost savings to offset falling earnings, pushing its shares up.

The fund manager said in a statement its assets under management grew to 113.7 billion pounds in the three months to end-June, from 107.3 billion the previous quarter.

Aberdeen warned that market conditions would remain difficult in the coming months but said it remained confident of growing its business despite the tough environment.

Its funds were boosted by 7.3 billion pounds through its acquisition of property asset manager Goodman, while it saw net new business in its existing operations of 877 million. Assets were eroded by around 1.8 billion due to market falls and foreign exchange movements.

Aberdeen CEO Martin Gilbert told journalists on a call he thought the worst of the credit crisis was over but that investor confidence remained fragile, which had caused redemptions to run at a rate 50 percent higher than last year.

The firm said it had earmarked 57 million pounds' worth of annualised cost savings, substantially higher than the 15 million in cuts it identified at its half-year results in May. Of those outlined, 40 million pounds will boost earnings.

Analysts welcomed the higher cost savings, which they said should help to overcome lower expected earnings due to the volatile market conditions. Aberdeen shares were up 7.8 percent at 131 pence at 9:05 a.m.

Cazenove reiterated its "outperform" recommendation, saying: "This is a good statement from Aberdeen, and while the funds flow is reassuring the key point today, in our view, is the commitment to reduce costs materially over the next two years. The market should take heart from this."

(Reporting by Simon Challis; Editing by Quentin Bryar and Sue Thomas)