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UPDATE 1-Total raises dividend as oil and gas spending peaks

PARIS, Feb 12 (Reuters) - French oil firm Total raised its dividend on Wednesday and confirmed it would cut capital spending even though output was stalling, falling into line with industry peers by reducing investment to try to boost shareholder returns.

Fourth-quarter adjusted net profit fell 19 percent to 2.47 billion euros ($3.38 billion), missing analysts' forecast for 2.69 billion euros, hit by shrinking refining margins, lower oil prices and delays at key fields such as Kazakhstan's Kashagan.

Full-year output fell to 2.299 million barrels of oil equivalent from 2.3 million in 2012 - a figure that will not help Total shake off a reputation for missing production targets. Chief Executive Christophe de Margerie's initial 2-3 percent output growth goal for 2013 was later dropped and the firm's finance chief still expected an increase last September.

Production delays at some projects where Total is not operator, including Kazakhstan's giant Kashagan field, in which Total has a 16.81 percent stake, and Angola LNG are holding back growth.

Other big oil firms have also reported lacklustre fourth-quarter results, with Shell posting what it said was the least profitable quarter in five years, while Exxon and Chevron also disappointed investors.

Total is betting on a string of start-ups in 2014 to see production rise again, including Angola's $8 billion CLOV project and the $5 billion Laggan-Tormore field off the coast of Scotland.

The group, Europe's third-largest investor-owned company by market value, said it would cut gross capital expenditure to $26 billion in 2014 from $28 billion last year, and said it would reward investors with a 3.4 percent rise in its quarterly dividend to 0.61 euros a share from 0.59.

Total shares were up 1.8 percent at 44.365 euros in early trading.

Spurred on by historically high oil prices in the past few years, integrated oil companies have increased their exploration spending to look for hydrocarbons in areas that until recently were deemed too remote or risky.

But the shareholders who control them have raised pressure to keep a lid on costs as they fear the oil price cycle could turn down and are demanding more generous payouts.

Total, which embarked on a so-called "high-risk, high-reward" exploration strategy to find giant fields in areas such as southern African seas, conceded last month it would start what De Margerie called a "soft landing" in capital expenditure.