* Rejects Knight Vinke request to spin off Unipro
* Spin-off might clear way for Fortum to buy all of Uniper
* Q1 adjusted operating profit fell 47 percent
* Uniper keeps FY targets, shares down 0.5 percent (Adds Uniper statement on Knight Vinke proposal)
By Vera Eckert and Arno Schuetze
FRANKFURT, May 7 (Reuters) - Uniper has rejected a call from activist investor Knight Vinke to spin off its Russian arm to address regulatory concerns that have prevented Finland's Fortum from taking full control of the German utility.
Knight Vinke, which holds a 5 percent stake in Uniper, has asked Uniper to table a motion at its May 22 annual shareholder meeting about spinning off Russian utility Unipro.
But Uniper said on Tuesday that would run counter to its strategy for an integrated business combining its European Generation, Global Commodities and International Power Generation operations.
Should shareholders approve the motion, however, Uniper would adhere to the vote and carry out the spin-off, it added.
State-backed Fortum has built up a 49.9 percent stake in Uniper, but Russian authorities have stopped it from gaining full control, arguing a water-testing licence owned by Unipro cannot be majority-owned by a foreign state entity.
Like Knight Vinke, activist hedge fund Elliott, which holds 17.84 percent in Uniper, has also made a proposal to overcome the deadlock. Elliott has called for a shareholder vote to push Uniper into talks with Fortum over a so-called domination agreement, hoping this will result in the Finnish group getting full control.
A Fortum spokeswoman said the company would not speculate about Uniper's upcoming shareholder meeting.
According to people close to the matter, Fortum does not want to be forced into a situation where it would have to pay a significant premium - to the benefit of Elliott and Knight Vinke - to gain control of Uniper.
Reporting first quarter earnings, Uniper pledged to overcome a weak start to the year in its power and gas business to meet full-year targets and said it might raise its dividend in 2020.
Finance chief Christopher Delbrueck said quarterly operating profits also fell on rising carbon emissions, but added that rising wholesale prices and the company's hedging of carbon costs would help.
Adjusted earnings before interest and tax (EBIT) fell 47.3 percent year-on-year in January-March to 185 million euros ($207 million).
But the company said higher production volumes and day-ahead prices at Russian power plants Berezovskaya 1 and 2 offset some of the decline and that this trend was seen continuing.
Uniper plans to pay a dividend of around 390 million euros this year, with Delbrueck holding out the prospect of about 490 million euros for 2020.
$1 = 0.8920 euros Reporting by Vera Eckert and Arno Schuetze; Editing by Louise Heavens and Mark Potter