UPDATE 1-Taubman Centers 1st-quarter FFO rises

* FFO up 3.8 percent

* Occupancy falls

* Shares trade down slightly in after-hours activity

NEW YORK, April 29 (Reuters) - Taubman Centers Inc (TCO.N), a luxury mall owner and developer, said quarterly funds from operations (FFO) rose 3.8 percent, boosted by income from lease cancellation fees and easily beating Wall Street's forecast.

Taubman posted a first-quarter FFO of $37.8 million, or 70 cents per share, compared with FFO of $36.4 million, or 68 cents per share, in the year-earlier quarter.

Analysts had expected FFO of 58 cents per share, according to Reuters estimates.

The quarterly FFO, a performance measure for a real estate investment trust, includes a $2.5 million charge related to job cuts.

Excluding the charges, Taubman posted FFO of $39.4 million, or 73 cents per share.

The luxury retail market has been pummeled as the recession brought layoffs at banks and hedge funds. The average sales per square foot fell 13.5 percent.