Private equity giant Blackstone Group on Thursday said earnings rose sharply from a year ago, beating analysts' estimates, driven by increased performance fees and improved valuations of its portfolios.

Blackstone's fourth-quarter economic net income (ENI) was $329 million, compared with a loss of $764 million a year earlier. For the full year, ENI rose to $703 million, from a loss of $1.2 billion for 2008.

On an after-tax basis, ENI was 29 cents a share. Analysts expected, on average, 20 cents a share, according to Thomson Reuters I/B/E/S/.

We believe the worst is behind us, although a recovery in Western economies could be gradual and uneven, Blackstone's CEO Stephen Schwarzman said in a statement, noting the recent market turbulence in January and February.

Blackstone has had a difficult time exiting investments by taking them public during the recent volatility in the markets.

Earlier in February, Blackstone-backed airline ticketing company Travelport LLC called off its $1.78 billion London listing, postponing what would have been the biggest IPO in London in two years.

Merlin Entertainments, the Blackstone-owned theme park operator that was talking to bankers in October said it has no near-term plans to go public.

But one of its companies, Graham Packaging Co Inc made its debut on the New York Stock Exchange on Feb 11, paving the way for an exit even though the firm did not get the price it wanted or sell the shares it planned.

Blackstone said it would pay a quarterly distribution of 30 cents per unit.

(Editing by Maureen Bavdek)

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