MELBOURNE, Feb 26 (Reuters) - Westfield Group Ltd WDC.AX, the world's top mall owner by market value, will not start work on any mall projects this year, it said on Thursday, saving up to A$2 billion ($1.3 billion), as capital markets remain shaky.

Its shares rose 5 percent on Thursday to A$10.25, outpacing a 1 percent rise in the broader market.

The group, which owns 119 shopping malls, reaffirmed it expects operating earnings per share to fall by 6 percent at worst this year, with growth in Australia and New Zealand offsetting declines in Britain and the United States.

The group's Australian malls are performing better than those offshore, partly because they have supermarkets and discount stores and don't depend as much on fashion outlets.

"What we see is a much healthier business than you would probably read about in the newspapers," Co-managing director Steven Lowy told analysts.

Also, Australian shoppers are still spending, cushioned by handouts from the government's stimulus package, lower fuel costs and a sharp drop in interest rates, he said.

The group expects 3-4 percent net operating income growth in Australia and New Zealand this year, while it expects a 2-3 percent fall at its U.S. and UK malls as rental growth shrinks and tenants close shops.

The group earlier this month raised A$2.9 billion with a share sale at A$10.50 a share.

Further shoring up its cash position, potentially for acquisitions, it said it would put a hold on 14 projects in the pipeline, which Lowy said would save the group between A$1.5 billion and A$2 billion.

The company did not comment on its plans for its stake in UK mall owner Liberty International (LII.L) or whether it had any designs on the second-biggest U.S. mall operator, General Growth Properties GGP.N, whose shares have collapsed on debt refinancing problems.

It would continue work recently began on its Stratford mall, next to London's Olympic village, and Sydney City.

"I don't think you'd see anyone else making those commitments at the moment," Peter Lowy told reporters on a teleconference.

Rivals, like top U.S. mall operator Simon Property Group SPG.N, have been abandoning mall projects.

Westfield posted a 10.4 percent rise in operating profit and reaffirmed it expected earnings to fall in the year ahead.

Operating profit for 2008 was A$1.94 billion ($1.26 billion), in line with analysts' forecasts around A$1.89 billion. As expected, it paid a full-year dividend of 106.5 cents a share.

It reaffirmed its guidance for earnings per share to fall to between A$0.94 and A$0.97 a share in 2009, and its dividend to be in the same range.

Writedowns on mall values totaled A$3.3 billion as flagged in January, taking it to a net loss of A$2.2 billion. ($1=1.543 Australian Dollar) (Reporting by Sonali Paul, Editing by James Thornhill)