* Earnings helped by foreign exchange gains
* Worst behind in Europe logistics market
* South Africa's vehicle market at "bottom of trough"
* Shares up 1.6 percent
(Recasts with CEO, analyst comment, shares)
By Tiisetso Motsoeneng
JOHANNESBURG, Aug 26 (Reuters) - South African Imperial Holdings said there were signs of recovery in Europe's logistics market but its local auto market was still mired, as it posted a 13 percent rise in annual earnings.
Africa's biggest transport and logistics group said on Wednesday its recession-hit European logistics business suffered a sharp decline in freight volumes in the six months to end-June.
It posted headline earnings per share from continuing operations of 698 cents for the year to end-June, boosted by 394 million rand ($50.5 million) foreign exchange gains and restructuring actions over the past two years.
Chief executive Hubert Brody said demand for steel products and higher commodity prices were signs the worst was behind for its operations in Europe.
"There are a couple of positive signs that make us quite convinced that we're definitely past the worst in Europe," Brody told Reuters in a telephone interview.
Imperial has suffered torrid times as high interest rates in the past few years in South Africa hit new vehicle sales and slowed demand for car rentals, while recession cut freight volumes for its logistics unit.
"The vehicle market is still really at the bottom of the trough and it will take some time to recover because banks are still conservative in granting credit," Brody said..
South Africa's new vehicle sales fell 25.9 percent year-on-year in July, sapped by weak domestic demand and extending a two-year decline.
However, Brody said rate cuts since December and risk appetite by banks would start to benefit the group's automotive retailing unit.
South Africa's central bank has cut interest rates by 5 percentage points since December, unwinding rises made between June 2006 and June 2008.
Its shares were up 1.6 percent at 77.95 rand at 1100 GMT, outpacing a slightly weaker JSE Mid cap index
"(The results are) better than what the market was expecting, but there's a lot of once-offs in it," one Johannesburg-based diversified industrials analyst said.
Imperial slashed its final dividend by 51 percent to 120 cents as revenue for continuing operations declined 7 percent to 52.2 billion rand. (Additional reporting by Serena Chaudhry; Editing by Dan Lalor) ($1 = 7.797 rand)