UPDATE 2-Kingfisher says still waiting for UK consumer recovery
* H1 underlying pretax profit 365 mln stg, down 1.6 pct
* H1 sales up 4.3 pct, down 0.8 pct like-for-like
* Ends half with net cash of 259 mln stg
* Shares down over 2 pct
LONDON, Sept 11 (Reuters) - Kingfisher, Europe's biggest home improvements retailer, reported a slight dip in profits on Tuesday and said it was too early to call an economic recovery in Britain, though it was encouraged by recent data pointing to an upturn.
UK retailers are still taking a cautious view of the market for the year ahead even though official data and surveys have shown an improving outlook for UK consumer spending, which generates about two-thirds of gross domestic product.
British finance minister George Osborne said on Monday that the UK economy has turned a corner and that its accelerating economy vindicated the government's austerity programme.
"While we're really welcoming the change in atmosphere and certainly the UK lending environment has fundamentally changed, I'm not sure we're there yet in calling a sustained economic recovery," Kingfisher's chief executive Ian Cheshire told reporters on Wednesday.
"The critical indicator for us is not so much the forward indicators (such as mortgage approval data) it's really what goes through the tills," he said, noting an expectation of a six to nine months lag in any improvement to the housing market feeding through to do-it-yourself expenditure.
He was speaking after the firm, which runs the B&Q and Screwfix chains in Britain as well as Castorama and Brico Depot in France, met forecasts with a 1.6 percent fall in first-half profits as a better second quarter was not enough to fully offset the impact of record cold weather in the first quarter.
Cheshire said the outlook for the French market, Kingfisher's biggest profit earner, was more uncertain than the UK, with its housing market and consumer confidence deteriorating.
Shares in Kingfisher, which have risen 48 percent over the last 12 months and hit a year high on Monday, were down 2.2 percent at 410 pence at 1103 GMT, valuing the business at 9.6 billion pounds ($15 billion).
That fall reflected the firm's cautious outlook and no return of cash to shareholders.
Having released an exceptional provision of 145 million pounds relating to the resolution of a French tax case, Kingfisher ended the half with net cash of 259 million pounds.
"As it stands at the moment we're not calling any capital surplus," said Cheshire, explaining there was still uncertainty over trading and a lack of clarity on future leases as the firm attempts to reduce B&Q's space.
Kingfisher, which trades from around 1,070 stores in nine countries in Europe and Asia, is the world's third-biggest home improvements retailer behind U.S. groups Lowe's and Home Depot. It has offset weak demand in many of its markets with a drive to improve profitability by buying more goods centrally, and directly, from places like China.
Cheshire said the firm would continue to focus on internal initiatives to drive growth, profit margins and cost savings.
"Investments in stores, a focus on value and the continued development of ranges and services put it in a strong position to take advantage of the upturn, when it eventually materialises," said analysts at Conlumino.
Kingfisher made an underlying pretax profit of 365 million pounds in the six months to August 3 - in line with the average of analysts' forecasts according to a company poll, but down from 371 million pounds in the same period last year.
Total first-half sales rose 4.3 percent to 5.72 billion pounds, though like-for-like sales fell 0.8 percent.
The company raised the interim dividend by 1 percent to 3.12 pence.