NEW YORK (AP) _ American Express said Monday that its earnings fell 18 percent in the first quarter, but still beat lowered analysts' expectations.

The New York-based financial and travel giant had warned earlier this month that its performance in the January-March quarter _ and for the year _ would be significantly lower than earlier forecast.

The company said that net income was $538 million, or 40 cents a share, in the first quarter, down from $656 million, or 48 cents a share a year earlier.

That beat the reduced projection of 39 cents from analysts surveyed by Thomson Financial/First Call.

Its shares were down 99 cents, or about 2.4 percent, at $40.51 at the end of regular trading on the New York Stock Exchange.

``As previously announced, the results reflect higher losses on American Express Financial Advisors' high-yield portfolio, as well as the impact of a weaker economy and equity market declines,'' the company said in a statement accompanying its earnings.

It said that excluding the junk bond losses, net income would have been flat.

American Express repeated its warning that growth in earnings per share ``is unlikely to meet its earlier target of 12 percent'' this year because of economic weakness and market instability.

American Express Financial Advisors reported net income of $51 million for the first quarter, down 79 percent from $245 million a year earlier, the company said.

The company said the division took a pretax loss of $182 million ``from the writedown and sale of certain high-yield securities, continued weakness in equity markets and narrower spreads on the investment portfolio.'' It said that $34 million of the losses reflected a shift to the new accounting rules on reporting derivatives and hedging.

Travel services, meanwhile, reported first-quarter profits of $522 million, up 16 percent from $448 million a year earlier.

Net income also rose at American Express Bank, which reported profits of $9 million in the first quarter compared with $7 million a year earlier for a 28 percent gain.

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