Ireland hopeful of damage limitation as Fitch warns on Brexit

* Noonan says impossible to calculate medium term impact

* Fitch says adverse EU/UK deal could mean ratings hit

* Retail sales rise 8.1 pct y/y, tourist numbers up 14 pct (Adds Fitch statement, retail sales and tourism figures)

By Padraic Halpin

DUBLIN, June 28 (Reuters) - Ireland (Other OTC: IRLD - news) is "quietly hopeful" it can avoid a big shock from whatever post-Brexit settlement Britain reaches with the EU, finance minister Michael Noonan said on Tuesday, as Fitch warned that an adverse outcome could impact Ireland's credit rating.

Ireland, Europe's fastest-growing economy last year, is considered to have more to lose than any fellow European Union member after its nearest neighbour and biggest trade partner voted to quit the bloc.

Noonan said his department forecasts that the initial impact will cut GDP growth to around 3.4 percent next year compared with a previous estimate of 3.9 percent.

But he said it was impossible to calculate the medium term effects until the alternative arrangements between the EU and Britain are known.

"We're quietly hopeful we won't get a major shock from the settlement," Noonan told reporters.

"If there are adverse consequences for Ireland, and there well may be, it's medium term, but the extent of them will depend on what kind of settlement succeeds British membership and how the negotiations between the UK and EU progress."

If a trade deal similar to the Norwegian model was struck -- which Noonan said was probably unlikely -- the impact on Ireland would be very minimal, he said, whereas a World Trade Organisation model with tariffs would have a more severe impact.

Fitch, which upgraded Ireland's credit rating in February, citing the sustained momentum of its economic recovery, said the Brexit vote was negative for Ireland, creating risks to growth and uncertainty around future relations with Northern Ireland.

It (Other OTC: ITGL - news) said the vote was unlikely to have any immediate implications for Ireland's rating -- currently A with a stable outlook -- and that the most important near-term impact will be through reduced consumer confidence.

"But a medium-term rating impact would be possible if the economic dislocation of Brexit were to prove severe," Fitch said in a statement.

That did not stop the yield on Ireland's 10-year bond nearing a record low, dragged down by expectations the European Central Bank will further ease monetary policy amid market turmoil sparked by Thursday's shock referendum result.

S&P said last week that Brexit had no immediate impact on its A+ rating for Ireland and it expected the Irish economy to stay resilient enough to withstand the negative impacts.

Data on Tuesday showed Irish retail sales rose 8.1 percent year-on-year in May, ahead of the British referendum. Tourism numbers for the first five months of 2016 were almost 14 percent higher than in the same period a year ago, when the sector recorded record growth.

Davy Stockbrokers warned that uncertainty created by the vote for Brexit could knock confidence among Irish consumers while growth in visitors from Britain, will slow due to the sharp fall in sterling and potential for a British recession. Britain accounted for 40 percent of all tourist arrivals in Ireland last year.

(Reporting by Padraic Halpin; Editing by Stephen Addison and Catherine Evans)