UPDATE 3-Imperial Tobacco loses out to Spanish black market

* To take 1.2 bln stg writedown on Spanish assets

* Blames country's worsening economic conditions

* Revenue up 13 percent across key brands

* Overall volumes down 2.7 percent

* Shares up 1.5 pct

LONDON, Oct 30 (Reuters) - Imperial Tobacco has taken a 1.2 billion-pound ($1.93 billion) writedown on its Spanish business as the impoverished country's smokers turn to cheaper black market cigarettes.

The world's fourth-largest cigarette group, which counts Davidoff, JPS and Lambert & Butler among its brands, said its pretax profit halved to 1.1 billion pounds in the year ending last month, although it raised its dividend by 11 percent to reflect higher tobacco prices.

Imperial Tobacco bought its Spanish rival Altadis, the maker of Gauloises and Fortuna cigarettes, for 11 billion pounds in 2007, before the European sovereign debt crisis, which saw Spain become one of the worst affected countries.

``High unemployment and increasing government austerity measures are placing further pressures on consumers and the duty-paid tobacco market, with illicit trade a growing problem,'' the company said in a statement.

Like bigger rivals Philip Morris, British American Tobacco and Japan Tobacco, Imperial is expanding into emerging markets to offset the decline in smoking in many of its mature markets.

``We see significant growth opportunities in our rest-of-the-world region across Eastern Europe, Africa and the Middle East and Asia-Pacific and we'll continue to invest to support sustainable growth,'' Imperial said in a statement.

The company's net revenue from tobacco rose 4 percent to 7 billion pounds ($11.2 billion). Its four key brands - premium-priced Davidoff, mid-priced Gauloises Blondes and budget brands West and JPS - achieved a 7 percent lift in volumes, with revenues up 13 percent.

Overall combined cigarette and fine-cut tobacco volumes fell 2.7 percent in the year to Sept. 30 because of tough markets in Poland, Ukraine and compliance with international trade sanctions against Syria.

``We believe that the company is making good progress but accept that further evidence may be required to convince the sceptics,'' analysts at Panmure Gordon said, retaining a 'buy' rating.

Shares in the group, which sells more than 340 billion cigarettes a year, closed up 1.6 percent at 23.69 pounds.

The group posted an 8 percent rise in adjusted annual earnings to 201 pence a share. Its annual dividend rose 11 percent to 105.6 pence a share, boosting its payout ratio to 52.5 percent of earnings.

In the UK and Germany, its two biggest markets, net revenues rose by 8 and 3 percent respectively thanks to product launches, while revenue rose 10 percent in its 'rest-of-the-world' region on healthy demand for its luxury Cuban cigars in Russia and the Middle East, and a strong performance in Asia Pacific.

Revenue in the Americas, where the United States is its primary market, fell 11.4 percent, but the group said it had seen improvements during the second half of the year.