UPDATE 1-First-quarter boost for Telefonica despite Spanish market

(Corrects name of company that acquired British O2 unit, in 3rd paragraph)

* First (Other OTC: FSTC - news) -quarter revenues up 12.6 pct, core profit up 7.7 pct

* Germany, Brazil, Latam grow but Spain still contracting

By Julien Toyer and Andrés González

MADRID, May 14 (Reuters) - Telefonica posted higher first-quarter sales and core profits on Thursday thanks to growth abroad, a sign that an expected turnaround at the Spanish company is underway even though its home market shrank again.

The telecoms company is hoping to start a new growth cycle in 2015 following a six-year slump that was prompted by a deep economic crisis in Europe and the subsequent restructuring of its business to pay down high debts.

Having recently bought rivals in Germany and Brazil and agreed the sale of its British business to Hutchison Whampoa , Telefonica is now focused on fixing its Spanish market, which accounts for about a quarter of revenues and has shrunk 40 percent since the start of 2009.

Telefonica last month announced price rises on most of its phone, Internet and television packages in Spain and hopes this will help boost revenue at home this year.

For now, however, the Spanish division reported a 3.8 percent drop in revenues to 2.88 billion euros ($3.3 billion) while operating income before depreciation and amortisation (OIBDA) fell 8.6 percent from a year ago and 5.2 percent from the previous three months. Margins were also under pressure.

The rest of the group fared better, with German revenues rising 69.4 percent thanks to the acquisition of E-Plus, Latin America up 19.6 percent and revenue in Brazil expanding 4.8 percent.

This helped revenues rise 12.6 percent to 11.54 billion euros at the group level and for OIBDA to climb 7.7 percent to 3.62 billion euros. The two measures were also boosted by a weaker euro and came in above analysts' expectations.

Net profit jumped 162 percent to 1.8 billion euros thanks to a one-off financial boost from the sale of the British division. ($1 = 0.8787 euros) (Reporting by Julien Toyer and Andres Gonzalez; Editing by Elisabeth O'Leary and David Clarke)