Federated Investors said its second-quarter earnings rose from a year earlier, but assets under management declined slightly, because of difficult market conditions.

The Pittsburgh investment manager, which has built a reputation as an acquirer of bank-owned fund units, said late Thursday that income from continuing operations rose 22.9%, to $46.7 million, or 44 cents per diluted share. The average estimate of analysts polled by Thomson First Call had called for earnings of 45 cents per diluted share.

Federated's assets under management increased 3% from a year earlier but fell 3% from the end of March, to $210.5 billion as of June 30. Equity and fixed-income assets managed through mutual funds and separately managed accounts fell 2% from a year earlier and a quarter earlier, to $52.2 billion.

On July 14, Federated increased its assets under management by $6.7 billion when it acquired MDT Advisers, a Cambridge, Mass., investment firm.

Since 2000, Federated has bought nine equity and bond fund units. In 2004 and 2005 it added $774 million of assets by purchasing fund units from FirstMerit in Akron, Riggs National in Washington, and Banknorth in Portland, Maine.

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