LONDON (Reuters) - Imperial Tobacco Group (>> Imperial Tobacco Group PLC) reported a 4 percent decline in underlying tobacco volumes for its fiscal first quarter, in line with its broader markets, and stood by its outlook for the year.

The maker of Davidoff and Gauloises cigarettes on Thursday said underlying tobacco revenue fell 1 percent in the quarter, ended on Dec 31. It blamed the timing of price increases, reduced trading in Iraq and lower sales of mass-market cigars in the United States ahead of a brand relaunch.

Including the impact of a "stock optimisation" programme, aimed at cutting inventories throughout the system, Imperial said tobacco revenue rose 4 percent, which was ahead of some analysts' estimates.

Imperial's shares opened up slightly in London trading.

Like all tobacco companies, Imperial is grappling with falling sales in a number of markets as people cut back on smoking due to tighter budgets and growing health consciousness.

It has cut costs and closed factories in its core tobacco business, and recently launched two new products that don't use tobacco -- a caffeinated mouth strip and a new e-cigarette.

With an ongoing focus on capital discipline and debt reduction, Imperial confirmed its goal to increase its dividend by at least 10 percent this year.

The world's fourth-largest international tobacco group is set to acquire the Maverick and Salem brands, and the e-cigarette blu, for $7.1 billion (£4.65 billion) as part of Reynolds American's (>> Reynolds American, Inc.) $27.4 billion purchase of Lorillard (>> Lorillard Inc.). The deals were approved by shareholders but await clearance from U.S. antitrust regulators.

(Reporting by Martinne Geller in London; Editing by Jason Neely and Mark Potter)