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* Revenues 534.9 mln stg, up 10.6 pct on the year
* Underlying pretax profit 195.2 mln stg, up 19.8 pct
* Assets at end-March 308.1 bln stg, from 312.1 bln stg
* Shares up 3.2 pct (Adds detail from statement, share reaction, analyst reaction)
By Simon Jessop
LONDON, May 2 (Reuters) - Britain's Aberdeen Asset Management said the pace of outflows from its emerging markets-focused equity funds has slowed considerably, as it reported a jump in first-half revenue due to market gains and cost cuts.
The performance marks the latest stage of a slow recovery for Aberdeen, which for several years has borne the brunt of investor caution over emerging markets, in addition to broad industry pressures including rising costs and a squeeze on fees.
That in part led to Aberdeen's decision in early March to be taken over by fellow Scottish investment house Standard Life in an 11 billion pound ($14 billion) tie-up, which Aberdeen said should complete in the third quarter.
Revenue over the six months to the end of March were 534.9 million pounds ($689.9 million), up from 483.6 million pounds in the year earlier period, while underlying pretax profit rose 19.8 percent to 195.2 million pounds, it said in a statement on Tuesday.
"These figures reflect improving sentiment towards emerging markets," said Aberdeen Chief Executive Martin Gilbert. "(and) together with favourable market conditions and the delivery of 70 million pounds of cost savings have resulted in a healthy rise in revenues and profits."
He said there had been "no real negative reaction" to the merger from clients, and confirmed media reports that there was a 'retention pot' of money to keep top managers after the deal, but declined to specify the size.
Shares in Aberdeen were up 3.2 percent at 0843 GMT, among the top gainers in a FTSE mid-cap index up 0.2 percent, while Standard Life shares led the blue-chip index with a 2.6 percent rise.
Net client outflows were heaviest in the first quarter, at 10.5 billion pounds, and slowed markedly in the second quarter to 2.9 billion pounds, but lagged the net inflows seen at rival emerging markets fund house Ashmore.
"The glimmers of light noted at the end of Q1 have continued, with a much improved Q2 flow performance," said Peel Hunt analyst Stuart Duncan in a note to clients, flagging a 'hold' rating.
"With reported results ahead of our and consensus expectations, we would expect relatively modest upgrades this morning."
The firm's operating margin over the period rose to 35.3 percent, from 32.2 percent in 2016, helped by the successful conclusion of a plan to cut 70 million pounds of annualised costs, it said.
Assets under management at the end of March were 308.1 billion pounds, from 312.1 billion at the end of September, supported by more buoyant markets and a weak pound. ($1 = 0.7764 pounds) (Reporting by Simon Jessop; Editing by Mark Potter and Louise Heavens)