First quarter results at Spain's Telefonica were slightly below expectations on Friday hit by the weight of a heavy economic crisis in its home market while Latin American units continued to drive earnings.

The euro zone's largest telecom nevertheless said figures were in line with internal forecasts and reaffirmed targets given at an investor conference last month.

First quarter net profit fell almost 2 percent to 1.62 billion euros ($2.30 billion), slightly short of the 1.72 bln euros expected in a Reuters poll of nine analysts.

Revenues from trouble-spot Spain, the focus of market concern, were weak however, declining 5.6 percent to 4.37 billion euros. The company is grappling with tough competition as operators grapple to attract and keep customers.

Latin America accounts for nearly half of group revenues, fast-growing Brazil driving the performance. Profit from the emerging region has helped offset damage in its more mature markets as a European economic crisis raises sensitivity to pricing.

Telefonica last month announced it would sack around 20 percent of its Spanish workforce, an effort to limit the damage to its results from a climate of towering Spanish joblessness, currently the highest in the European Union at 21.3 percent.

With few attractive large-cap choices in the European Telecoms sector, Telefonica's exposure to Latam growth stands out, while downside risks in Spain are cushioned, in our view, by the planned restructuring of 20 percent of the workforce, said Goldman Sachs' analyst Tim Boddy in a recent research note.

(Reporting by Elisabeth O'Leary; Editing by Mike Nesbit)

($1=.7045 euros)