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UPDATE 1-Paul Singer's Elliott Management raises $5 bln in 24 hrs -letter

(Recasts lead with additional details from Elliott's letter; adds quotes from Elliott and from a hedge fund investor, details from letter, background)

NEW YORK, May 5 (Reuters) - Paul Singer's hedge fund firm Elliott Management Corp raised more than $5 billion in about 24 hours this week, citing a major potential investment opportunity at a time when Singer said financial markets could face a disruption after being distorted by years of economic stimulus.

Singer, in an email to investors on Wednesday announcing the offering of up to $5 billion, said that the funds would be used toward the "possibly large opportunity set that could emerge when investor confidence is impaired, recent correlations and assumptions dont work, and prices are changing rapidly."

In a separate note sent out to clients on Friday, and seen by Reuters, Elliott said that more than $5 billion had been raised as of Thursday.

New York-based Elliott manages $32.8 billion. That does not include the fresh $5 billion, which is set up to be drawn from investors over the next several years.

A spokesman for Elliott declined to comment.

"It is of no surprise that such a talented hedge fund manager can raise $5 billion," said Arthur Salzer, chief investment officer of Northland Wealth Management in Markham, Ontario. "In a world of management fee compression for many funds due to poor performance, there are always the standouts."

Singer, a conservative billionaire known for his pessimistic views on the financial markets, said in his pitch to investors, "We are at an extraordinary juncture in markets and in the prospects for trading and investing."

He likened markets to a "coiled spring," distorted by more than eight years of economic stimulus programs by central banks in the United States and other developed countries.

The new fund, Singer said, will let Elliott pounce when and if that spring uncoils.

"The nature of modern markets is that rich opportunity sets seem to be ephemeral, providing surprising volatility, bargains and dislocations for only brief periods of time before governments, aware of the politically destructive effects of extreme volatility, rally to take stern actions to keep the balls up in the air," Singer wrote.

Elliott, according to the letter, has recently focused on investing in securities of distressed companies, especially those in the energy sector, and stocks using a corporate activism approach.

Elliott's current activist bets include BHP Billiton Ltd , Akzo Nobel and Arconic Inc. (Reporting by Lawrence Delevingne; Editing by Leslie Adler)