WRAPUP 2-French luxury giants gain from priciest brands

* LVMH, PPR both report 20 pct jump in H1 profit

* Growth driven by sales of top-end brands

By Nina Sovich

PARIS, July 26 (Reuters) - Luxury companies in France continue to reap profits from selling wealthy customers in Asia the highest priced and most exclusive goods, which are outpacing growth in lower-tier luxury and retail products.

Both PPR and LVMH reported strong first-half profit growth on Thursday, driven by sales in "absolute" luxury goods such as watches and jewellery and crocodile handbags that can top the 100,000 euro ($123,000) mark.

The growth was particularly evident in emerging markets such as China, where neither company reported a slowdown despite concerns that the world's second-largest economy may be cooling.

LVMH, the world's largest luxury company, which owns brands like Louis Vuitton and Celine, reported a 20 percent rise in its profit from recurring operations, which hit 2.66 billion euros.

PPR's recurring operating income rose 20.4 percent but the performance of Puma, a non-luxury sportswear and lifestyle company, pulled down earnings.

PPR's luxury division profit growth was up 30 percent for the half, with profits at Yves Saint Laurent rising more than threefold and profits at Bottega Veneta up 58 percent.

"We are confident our full-year financial performance will outstrip that of 2011," said Chief Executive Francois-Henri Pinault.

Despite the global economic slowdown, the luxury market has proven remarkably resilient due in part to sales in the Asia-Pacific region, mainly China, which is now the fastest-growing luxury market in the world.

That profitability was thrown into doubt earlier in July when Burberry reported that sales had been hit by a slowdown in China, but concerns were assuaged somewhat when Hermes and Remy Cointreau reported good growth in emerging markets.

LVMH said that second-quarter organic growth in China rose 15 percent, in line with the first quarter. It noted that marketing costs had pulled down the margin of Louis Vuitton, but the brand's profits should recover in the second half.

"The Louis Vuitton results were a bit disappointing," said Thomas Mesmin, an analyst at CA Cheuvreux.

The increased profitability of luxury has spurred PPR to shed some of its poor performing retail operations. The company is trying to turn around its French retail outlet Fnac, which reported a loss on Thursday, and sell it.

PPR also announced on Thursday it had sold a 29.8 stake in distribution firm CFAO to Toyota Tsusho Corp to pay down debt. PPR's net debt stood at 4.48 billion euros as of June 30.

Profit at LVMH's watches and jewellery division rose 87 percent to 159 million euros in part due to the company's integration of Bulgari, which it bought last year for an eye-popping multiple of 28 times earnings.

Similarly, profits in the wines and spirits division, which includes champagne maker Moet Hennessy and where the company has aggressively raised prices in recent months, rose 20 percent to 496 million euros.

The company said growth was due in part to sales in its most expensive "prestige brands".

($1 = 0.8130 euros) (Reporting by Nina Sovich and Pascale Denis; Editing by Jon Loades-Carter, Gary Hill)