* Opearting EPS C$1.22 vs est C$0.75
* Stronger markets add C$348 mln to bottom line
* Insurer maintains dividend at C$0.36/share
* Analysts says core results slightly ahead of expectations
By Cameron French
May 10 (Reuters) - Sun Life Financial Inc profit rose by a stronger-than-expected 56 percent in the first quarter, helped by stronger stock markets and rising bond yields, Canada's No. 3 life insurer said on Thursday.
Sun Life earned C$686 million ($683 million), or C$1.15 a share, compared with a year-earlier profit of C$438 million, or 73 Canadian cents.
On an operating basis, which excludes certain items but includes the impact of markets, the company earned C$1.22 a share. That was well ahead of analysts' expectations of a profit of 75 Canadian cents, according to Thomson Reuters I/B/E/S.
Stronger stock markets and higher bond yields added C$348 million to results during the quarter, a larger impact than was expected, said Peter Routledge, an analyst at National Bank Financial.
"The core numbers, which would remove market-related gains or losses, were pretty much in line, a little better than we had," he said.
Weak markets sent the company to losses in the third and fourth quarters of 2011.
Total premiums and deposits rose to C$25.3 billion from C$20.0 billion.
Sun Life is the third Canadian life insurance stock to report first-quarter results for 2012.
Last week larger rivals Manulife Financial and Great-West Lifeco reported results that rose on a year-on-year basis but disappointed investors due to weak corporate bond spreads and a gloomy second-quarter outlook.
Those results sparked a selloff among Canadian life insurers, including Sun Life.
Routledge said he expected Sun Life's results would spur it to outperform its peers.
The company's shares closed at C$22.13 on the Toronto Stock Exchange on Wednesday, and are down 7.7 percent over the past week.
Volatile stock and bond markets have led to wild swings in Canadian life insurers' results over the past three years as they must make regular reserve adjustments to reflect the impact of market activity on the portfolios they have set up to cover future policy obligations.
Sun Life has moved to reduce its market exposure under new Chief Executive Dean Connor, who took over from longtime CEO Donald Stewart late last year.
The company's erratic performance in recent quarters has prompted worries that it could cuts its dividend, but Sun Life has steadfastly maintained its payout of 36 Canadian cents a share, and did so again on Thursday.