* Organic revenues up over 4 percent in first 9 months
* Margins improved in Q3
* Operating companies see 2011 organic revs up 2-4 percent
* To raise goals for digital, emerging markets business
* Shares hit 3-year high, then fall back to down 2 percent
(Adds TV link, analyst comment, shares, detail, background)
By Mark Potter
BERLIN, Oct 26 (Reuters) - The outlook for WPP, the world's biggest advertising firm by sales, is set fair for the rest of this year after a strong third quarter, chief executive Martin Sorrell told Reuters on Tuesday.
However, there is considerable uncertainty among clients about prospects for 2011 ahead of mid-term U.S. elections and amid concerns that debt crises might spread within the euro zone, he said on the sidelines of the World Retail Congress.
"It's pretty set fair for the rest of the year," Sorrell said when asked about business prospects.
Organic revenue growth, which excludes acquisitions, was up over 4 percent in the first nine months of the year, exceeding the group's full-year target, and profit margins improved in the third quarter compared with the same time last year, he added.
Sorrell told reporters earlier that third-quarter results on Friday would show the biggest rise in quarterly organic revenues for ten years.
Publicis, the world's third-largest ad group, said last week it had nearly doubled its organic growth forecast for the year to around 6 percent after its third-quarter figures beat forecasts.
UNCERTAINTY
WPP's shares rose to a three-year high of 748.5 pence, before falling back to trade down 2 percent at 729.5 pence by 1415 GMT, slightly underperforming the FTSE-100 index of leading British companies.
UBS analyst Alastair Reid cut his investment rating on WPP shares to "neutral" from "buy", citing their strong recent gains and uncertainty over the outlook for 2011.
Sorrell said WPP's operating companies were probably more bullish about prospects for 2011 than the centre of the business, and were looking at organic revenue growth of 2-4 percent next year -- similar to analysts' expectations.
But he stressed the budget had not been set for next year, and it was a good idea to be conservative in order to maintain discipline on costs.
"I think we'll see some rebalancing next year," he said, adding WPP was unlikely to be able to continue growing at about 8 percent in the United States, but that growth in Asia, Latin America, the Middle East and Africa looked set to pick up.
Revenues from digital media and emerging markets both accounted for about 28 percent of the group total, closing in on targets to reach a third of total revenues, Sorrell said.
These targets were likely to be raised to a high 30s percentage, or possibly 40 percent, he said. (Additional reporting by Victoria Bryan in Berlin and Kate Holton in London; editing by Sue Thomas)