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UPDATE 1-Credit Agricole profit just below estimates on weak retail, capital markets

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* C.Agricole Q1 net income up 1.2 pct

* LCL revenue down 5 pct, IB revenue down 6.3 pct

* Confirms expects LCL revenue to be stable in 2018

* Insurance, asset and wealth management rev up 17.4 pct

* CEO says on track to reach 2019 targets (Updates with details, CEO comment)

PARIS, May 15 (Reuters) - Credit Agricole's quarterly profit fell short of expectations on Tuesday as lower revenue from French retail and capital markets trading ate into gains from asset management at the banking group.

The bank has been narrowing its focus towards its key home markets of France and Italy.

Credit Agricole has also been undertaking acquisitions in retail and wealth management, while selling off some assets, such as its Egyptian banking business and a stake in investment firm Eurazeo.

First-quarter net income rose 1.2 percent to 856 million euros ($1.03 billion), slightly lower than analysts' estimates of 878 million euros, according to a Reuters poll of 6 analysts.

Revenues rose 4.4 percent to 4.91 billion euros, compared to 4.98 billion expected by analysts.

Credit Agricole said the "disposal of non-strategic entities, exchange rate variations and regulatory contributions weighed on the results".

Credit Agricole has over the past year simplified a complex shareholding structure with its parent mutual banks in order to ease investor concerns about its ability to build capital buffers and maintain its dividend payouts.

It now sees insurance and asset management as key revenue growth engines. Amundi, which is majority-owned by Credit Agricole, has already reported higher first quarter profits as its integration of Pioneer Investments was progressing ahead of schedule.

Credit Agricole's revenue from asset gathering, which includes insurance, asset and wealth management, rose 18 percent to 1.47 billion.

However, Credit Agricole - France's second-biggest bank - followed its French peers in reporting a drop in earnings from fixed income trading, with underlying revenues in market activities falling by 23.8 percent.

Along with other banks, Credit Agricole cited a 'wait-and-see' approach by clients in the first quarter and a low euro bond issuance as reasons for the subdued performance in this area.

Another weak spot was French retail banking, where revenues fell by 5 percent after last year's first quarter turned out to have been a high-comparable base for banks, given a peak in renegotiation fees for mortgage loans a year ago.

"All the better that the renegotiations are over. We do not have one-shot commissions that we had during the first quarter, but in return, all other commissions have grown in Q4 versus Q1," Chief Executive Philippe Brassac told journalists.

Nevertheless, Credit Agricole confirmed its guidance for a stable revenue in French retail in 2018 versus a year ago.

Credit Agricole is the worst performer among French banks so far this year after full-year results were impacted by several one-off items, including an exceptional tax surcharge introduced by the French government for the largest corporates.

Its shares, which rose 17 percent in 2017, are down 3.5 percent so far in 2018, versus a 2.7 decline in European 600 Banks index.

($1 = 0.8351 euros) (Reporting by Maya Nikolaeva and Matthieu Protard; Editing by Sudip Kar-Gupta)