* Expects U.S. business to turn around in H2
* Maintains interim dividend at 1.3 pence
* Recruits to securities, corporate broking teams
* Revenue in Q2 up 27 percent from previous three months
* Shares up 2.5 percent (Adds CEO comment, share price)
By Lorraine Turner and Daisy Ku
LONDON, Aug 11 (Reuters) - British stockbroker Collins Stewart Plc said low trading levels weighed on its first-half profit, which fell 36 percent, but its shares rose on signs of a recovery with revenues improving in the second quarter.
Chief Executive Mark Brown said the outlook for the company remained uncertain, but he expected wealth management to continue to generate solid income, while its U.S. business and Hawkpoint, its mergers advisory arm, could see improvements in the second half.
"The one which is difficult to call is Hawkpoint. The pipeline is good ... that suggest things should be better in the second half this year," said Brown, adding that Hawkpoint is a major swing factor both for the upside and the downside.
He said he expected Collins Stewart Wealth Management (CSWM), which accounted for more than half of Collins' operating profit before share-based payment charges of 9.1 million pounds in the first half, to continue to generate solid income in the second half.
While Hawkpoint made a small profit of 0.7 million pounds in the reporting period, U.S. securities operations generated an operating loss of 2.8 million pounds compared with a profit of 1.6 million last year, while warning that the general outlook remained tough.
"We'll have big problem if it (the U.S. business) doesn't show a small profit in the second half ... there should be a turnaround there," said Brown.
Collins Stewart, which operates in capital raising, corporate advisory and wealth management, said efforts to focus on core services and cost cuts at the end of last year were bearing fruit.
The broker made 6.1 million pounds ($10.0 million) pretax in the six months to the end of June on revenue of 95.3 million, slightly higher than last year on favourable exchange rate movements and new business.
Revenue in the second quarter rose 27 percent from the previous three months.
The group strengthened key teams with a number of new appointments, including recruiting Julian Smith from Dresdner Kleinwort as managing director for its corporate broking team.
"The numbers look good in general, it looks like there are signs of a recovery and it is very positive that they are hiring," Sarah Spikes at Arden Partners said. "The only concern is that it made a loss in the U.S. business," she said.
The difficult trading environment last year, when the broker's first-half profit plunged 82 percent, continued in the first six months of 2009, Collins Stewart said.
"Trading volumes in large-cap equities have been weak during 2009 and this put pressure on secondary commissions for both our UK and U.S. Securities businesses".
Collins Stewart said its bonus levels stayed the same in the first half. It maintained its interim dividend at 1.3 pence and reported net cash of 74.6 million pounds.
Its shares were 2.5 percent higher at 0744 GMT, after gaining 39 percent since the start of the year. (Editing by David Holmes and Jon Loades-Carter) ($1 = 0.6059 pound)