(Corrects first paragraph to read "was facing" instead of"suffered")
* H1 underlying pretax profit down 40 pct
* Revenues down 20 pct; interim dividend 7.5 p/share
* Shares down 7.9 pct, leading FTSE mid-cap fallers
By Simon Jessop
LONDON, May 3 (Reuters) - British funds firm Aberdeen AssetManagement was facing the biggest one-day drop in itsshare price since the height of the financial crisis on Tuesday,after reporting a slump in first-half profits due to investorsfleeing emerging markets.
A barometer for investor sentiment towards the highlyvolatile developing economies of Asia, Africa and Latin America,the firm has seen billions of pounds pulled out of its fundsamid concerns around global growth.
While its emerging markets-focused equity funds posted netinflows for the first time in three years in the three months toend-March, total outflows remained stubbornly high at 16.7billion pounds and the firm said more could follow in the comingquarters.
That weakness was reflected in a 20 percent fall in its first-half revenue and 40 percent fall in underlying pretaxprofits to 162.9 million pounds ($239.84 million), with assetsunder management dropping to 292.8 billion pounds at the end ofMarch from 330.6 billion a year ago.
Aberdeen's shares were down 9.7 percent at 269.6 pence by1110 GMT, heading for their biggest one-day drop since October2008 and making them the biggest faller in a marginally weakerFTSE mid-cap index.
"These results reflect the challenging conditions Aberdeenhas faced during the past three years, in particular weakness inemerging markets," Aberdeen's chief executive, Martin Gilbert,said in a statement.
While the impact of persistent asset outflows had beentempered by an emerging market rally in recent weeks andcurrency gains, the company said it remained vulnerable tofurther outflows over the next few quarters.
"It is encouraging to note that our equity portfolios haveperformed strongly against their respective benchmarks duringthe first four months of 2016 as investors have begun to focusonce again on companies which had previously been undervalued bythe market," said Chairman Roger Cornick.
"However, this does not mean a dramatic improvement in newbusiness flows is anticipated in the short term, as we recognisethat many potential investors may need more evidence that thisrotation is firmly established before investing."
In response, Shore Capital analyst Paul McGinnis advisedclients to sell out in favour of rivals Henderson orSchroders, both of which saw assets rise in early 2016,thanks largely to currency gains.
"We think the sharp rise in the Aberdeen share price on theback of a recent EM rally has not only gone too far but alsorisks masking the weaker fundamental issues surrounding fundredemptions and investment performance," he wrote in a note.
Aberdeen said it would pay an unchanged interim dividend of7.5 pence a share and Gilbert told reporters on a newsconference call that the board was committed to paying out aprogressive dividend, although it was dependent on the outlook.
In response to the still-weak environment, Aberdeen said itplanned to deliver 70 million pounds of annualised "costefficiencies" by 2017, but Gilbert said there was no scope tomaterially increase that amount without degrading clientservices.
Armed with 401.4 million pounds in cash, with headroom of218 million above the regulatory capital it is required to hold, Gilbert said he was open to bolt-on acquisitions, althoughthere was nothing in the pipeline. ($1 = 0.6792 pounds) (Reporting by Simon Jessop; Editing by Sinead Cruise and GregMahlich)
