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REFILE-UPDATE 1-UBS Q2 profit beats forecasts, keeps cautious outlook

(Refiles to fix garble in paragraph seven)

Q2 net profit 1.17 bln Sfr vs 879 mln estimate in Reuters poll

* Net new money rises

* Credit Suisse also reporting results

ZURICH, July 28 (Reuters) - UBS kept a cautious outlook on the second half of 2017 on Friday after it reported an unexpected rise in second-quarter net profit, boosted by higher earnings at its flagship wealth management business.

The world's largest wealth manager reported 1.174 billion Swiss francs ($1.21 billion) in second-quarter net profit, up 14 percent from a year earlier and far overshooting the average forecast in a Reuters analyst poll for 879 million francs.

"Improved investor sentiment and enhanced confidence have translated into improvements in wealth management client activity levels," Switzerland's biggest bank said in a statement.

"However, the persistence of low volatility levels and seasonality factors may continue to affect overall client activity."

The bank's bottom line was boosted by a strong performance in the group's wealth management division, where profit from the Asia-Pacific region for the first time contributed more positively than any other region.

Operating profit before tax at UBS's wealth management division and its U.S. brokerage business rose 12 percent and 26 percent respectively.

UBS's common equity Tier 1 (CET1) ratio, a closely watched measure of balance sheet strength which the bank uses as a benchmark for its dividend, fell to 13.5 percent from 14.1 percent at the end of the first quarter.

Swiss rival Credit Suisse, which also reported second-quarter results on Friday, had a CET1 ratio of 13.3 percent.

UBS's CET1 leverage ratio rose to 3.7 percent, above the 3.5 percent required by Swiss regulators by the end of 2019.

The bank confirmed its target of cutting costs by a net 2.1 billion francs by the end of 2017 versus 2013, saying it had saved 1.8 billion francs by the end of the second quarter. (Reporting by Brenna Hughes Neghaiwi and Joshua Franklin; Editing by Michael Shields)