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UPDATE 2-Prudential Financial posts profit gain on rising markets

(Recasts to focus on market values)

Nov 1 (Reuters) - Prudential Financial Inc reported an 11 percent rise in adjusted quarterly operating profit on Wednesday, beating Wall Street's expectations, as rising market values helped its annuities and asset management businesses.

Prudential, the largest U.S. life insurer by assets, earned $1.3 billion, or $3.01 per share, in adjusted profit during the third quarter, up from $1.2 billion, or $2.66 per share, in the year-ago period.

Its profit topped analysts' average estimate of $2.71 per share, according to Thomson Reuters I/B/E/S.

Although Prudential's annuities sales declined dramatically, the insurer still generated more fees from the business because market performance drove overall account values to a record high. It reported record assets under management and retirement account values for the same reason.

During the third quarter, major global stock indexes posted gains, with some benchmarks like the S&P 500 hitting new records. Bond markets were impacted by an uptick in interest rates, which the insurance industry has long been waiting for to drive profits higher.

Adjusted operating earnings in Prudential's U.S. retirement solutions and investment management business, its largest division, rose about 6 percent to $1.1 billion.

Its U.S. individual life and group insurance division reported $211 million in adjusted operating earnings, a 22 percent jump.

The adjusted earnings exclude one-time items related to the deferred cost of acquiring new policies, reserves for minimum annuity benefits and legal costs in either quarter. (Reporting by Suzanne Barlyn in New York and Diptendu Lahiri and Pallavi Dewan in Bengaluru; Editing by Savio D'Souza and Rosalba O'Brien)