* AEP says not seeing a continued decline in sales
* Higher electric margins help Xcel results
* Strength in gas transmission business helps Dominion
* Dominion shares up 1 pct, AEP up 2 pct pre-market
Jan 28 (Reuters) - Power producers Dominion Resources Inc (D.N), American Electric Power Co (AEP.N) and Xcel Energy Inc (XEL.N) posted better-than-expected fourth-quarter profits and reaffirmed their full-year earnings outlooks, indicating confidence that the economy is turning around.
"The best news is that we aren't seeing a continued decline in sales," AEP Chief Executive Michael Morris said in a statement.
Morris also noted that industrial sales showed a slight uptick in December, but he cautioned that one month does not represent a trend.
Further, residential and commercial sales, an area of significant year-on-year growth before the recession, have stalled but have not declined as much as expected, he added.
Profit at the company climbed to 50 cents a share, from 38 cents a share a year earlier. This topped analysts' average forecast of a profit of 46 cents per share. [ID:nN28187085].
Xcel reported a fourth-quarter profit of 37 cents a share, 1 cent above both Wall Street estimates and its year-ago profit of 36 cents a share. [ID:nSGE60R0HX]
Higher outage costs, meanwhile, hurt Dominion.
Fourth-quarter earnings at the company came in at 63 cents a share, down from 28 cents a share in the year-earlier quarter.
Excluding one-time items, however, earnings of 63 cents per share topped the 60 cents a share that analysts had forecast on average, according to Thomson Reuters I/B/E/S. [ID:nN28146487]
Dominion shares were up 1 percent, while AEP was up 2 percent in pre-market trade Thursday. (Reporting by Hezron Selvi and Adveith Nair in Bangalore; Editing by Mike Miller)