* Cuts profit target amid weak demand, rising costs
* 2011 net, core profit slightly below forecasts
* Shares down 3.2 percent (Recasts, adds analyst, shares)
MADRID, Feb 23 (Reuters) - Spain's largest power firm Iberdrola (TLO: IBE-U.TI - news) warned on profits on Thursday after a weak set of 2011 results that showed demand falling in core markets while consumption remained stifled in fragile economies.
Iberdrola has been expanding in semi-regulated sectors like wind power, where it is a world leader, as well as in the growing business of power networks to compensate for falls in its traditional energy business.
But strength in fast-growing Brazil and other regulated markets was not enough to offset a weak fourth quarter for UK generation and a disappointing renewables performance in Spain and the United States due to rising costs.
In this landscape, Iberdrola cut its 2010-2012 recurrent net profit target to under 5 percent growth and its EBITDA growth target to about 5 percent, compared with previous guidance of 5-9 percent average annual growth in both measures.
"We suspect there is a big element of conservatism and clean-up in these numbers, but still underlying figures are weak," JP Morgan said in a note to clients.
Shares, which have fallen 3.6 percent so far this year, were down 3.2 percent at 4.518 euros by 1030 GMT, underperforming a 1.1 percent decline on Spain's blue chip index, with analysts saying they do not rule out broker downgrades.
Net (Frankfurt: A0Z22E - news) profit at Iberdrola fell 2.3 percent in the full-year to December to 2.8 billion euros ($3.7 billion), hit by weak demand and higher commodity prices, and slightly below forecasts for 2.89 billion euros from a poll of six analysts.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) at the group, whose main shareholder is Spanish builder ACS (Madrid: ACS.MC - news) with 19 percent, rose 1.6 percent to 7.65 billion euros, compared with forecasts for 7.69 billion.
Analysts said many investors were also avoiding the stock until the country's new government spells out plans to eliminate Spanish utilities' 24 billion euro tariff deficit.
Meanwhile, British utility Centrica (LSE: CNA.L - news) reported a small increase in full-year profit as higher commodity prices and mild weather offset gains in its upstream oil and gas business. ($1 = 0.7552 euros) (Reporting By Tracy Rucinski; Editing by Helen Massy-Beresford)
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