European insurers said tough economic conditions triggered by the euro zone debt crisis were hitting the life insurance market, leaving the non-life and emerging markets sectors to take up the slack.

Aviva and ING both reported weaker quarterly life sales in Europe, where consumers have been putting off savings decisions amid austerity measures aimed at restoring confidence in governments' ability to repay debt.

Some of the short-term headwinds in those markets are very real, Aviva chief executive Andrew Moss told reporters on Thursday.

European insurance shares are down 12 percent this year, reflecting fears sovereign defaults could force insurers to take writedowns against government bond portfolios, as well as worries over the impact of a sluggish economy.

Weaker third-quarter trends in life insurance were partly offset by a stronger non-life performance, with reinsurer Swiss Re and commercial insurer RSA both reporting better than expected sales.

The non-life insurance business seems to be doing well, said Jean Francois Tremblay, an analyst at RBC Capital Markets.

What is driving that is the price increases that reinsurers and primary insurers have been pushing through, and on top of that claims inflation seems to be behaving well.

While competition has prevented non-life insurers raising prices in many European countries, the industry has, in the past year, been able to introduce gradual increases to compensate for a drop investment income caused by rock-bottom interest rates.

Demand for non-life insurance traditionally holds up better than life insurance during economic downturns, as consumers have less discretion over whether they buy non-life products such as motor insurance.

Aviva, a composite insurer operating in both the life and non-life markets, said an 8 percent decline in nine-month life insurance sales was offset by a 9 percent jump in non-life premiums.

Insurers' third-quarter numbers were also bolstered by robust growth in emerging markets, with RSA, Swiss Re and Anglo-South African financial conglomerate Old Mutual all hailing bumper sales in fast-growing Asia and Latin America.

Growth continues to be driven by Asia, especially China, Swiss Re chief financial officer George Quinn said on a conference call.

European insurance shares were up 2.45 percent by 1200 GMT, buoyed by hopes a referendum on a bailout for critically indebted Greece will be abandoned, clearing the way for the rescue package to go ahead.

Aviva, Britain's second-biggest insurer, was one of just three leading insurance stocks in negative territory after the company said rising yields on European sovereign and corporate debt had cut its capital surplus to 2.7 billion pounds from 4 billion at the end of June.

(Editing by Dan Lalor)