UPDATE 1-Perpetual H1 operating profit beats expectations

(Adds details, share reaction, background)

SYDNEY, Feb 20 (Reuters) - Perpetual Ltd (PPT.AX: Quote, Profile, Research), a mid-size Australian fund manager, beat market expectations with a 15 percent rise in its first-half operating profit but warned its earnings would be impacted by market volatility.

Shares in Perpetual, which were hammered in the run-up to its profit announcement along with peers AMP Ltd (AMP.AX: Quote, Profile, Research) and AXA Asia Pacific Holdings Ltd (AXA.AX: Quote, Profile, Research), rose 2 percent to A$54.05 in a flat overall market.

The shares are still down 35 percent from their all-time high of A$84.58 reached in May last year.

Perpetual, whose funds under management fell about 8 percent to A$34.3 billion ($31.5 billion) at the end of December, said despite the short- to medium-term market volatility the funds management industry continues to be underpinned by Australia's compulsory pension regime, known as superannuation.

"The recent fluctuations in the Australian equities market will impact our revenue and our profit to June 30, 2008," the company said.

Perpetual reported an operating profit, which excludes market fluctuations, of A$79.3 million for six months ended December. Five analysts on average forecast Perpetual's operating profit to be A$77.3 million.

Net profit after tax fell 15 percent to A$87.6 million.

Australian fund managers have benefited from a five-year bull run in stock markets while superannuation has ploughed money into asset managers. That has seen the managed funds industry expand to about A$1.15 trillion ($1.05 trillion).