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UPDATE 2-Lafarge confident on Holcim merger, sees recovery in Europe

* Q2 sales 3.37 bln eur, EBITDA 812 mln eur

* Lafarge confirms 2014 targets, says forex hit to lessen

* Says sees signs of recovery in Poland, Britain, Greece

* Shares rise 0.7 pct

(Adds detail on Holcim merger plan, improved business in Greece, shares)

PARIS, July 25 (Reuters) - Cement maker Lafarge said on Friday it was well on track for its planned merger with Swiss peer Holcim and was seeing the first signs of recovery in Europe.

In a statement, the Paris-listed group posted another drop in quarterly sales and profit, mainly due to the strength of the euro against emerging market currencies and the Canadian dollar, and the company's shrinking scale as it sheds assets to trim debt.

However, the results were roughly in line with analysts' expectations and the cement maker stuck to its full-year goals. Lafarge shares rose after the group said it was confident of completing its deal with Holcim in the first half of 2015.

The Lafarge-Holcim merger, unveiled in April, would create the world's top cement group with $44 billion in annual sales and would be the industry's biggest ever tie-up.

The move would help the pair slash costs, trim debt and better cope with the rising energy prices and sluggish demand that have hurt the sector since the 2008 economic crisis. The pair have kicked off a multi-billion series of asset sales to win approval from competition regulators.

"Discussions with antitrust authorities are going on in a constructive way, and we do not expect that this discussion would put some difficulties on the expected timing (of the merger)" Chief Financial Officer Jean-Jacques Gauthier told analysts on a conference call.

The divestments announced so far - which account for around 3.5 billion euros ($4.7 billion) in annual sales - had been thought out before the merger was announced and will not harm the synergies expected from the deal, Gauthier said.

Lafarge and Holcim are seeking buyers for Holcim's French activities, Lafarge's German ones and other operations in Austria, Hungary, Romania, Serbia, Britain, Canada, the Philippines, Mauritius and Brazil.

Lafarge said it would select buyers based on how quickly the sell-off could be wrapped up and how much value it could generate. Lafarge's banks will send detailed information on the assets to potential buyers "in the coming days", Chief Executive Bruno Lafont told reporters.

Holcim CEO Bernard Fontana told reporters this week that the companies had received over 100 expressions of interest from rivals and private equity firms, with several parties indicating a desire to buy the entire portfolio of assets.

IMPROVEMENT IN GREECE

Lafarge was already on a drive to cut costs and shed assets to trim debt after an acquisition spree in the past decade earned it "junk" credit ratings.

Lafarge aims to bring debt below 9 billion euros this year and confirmed it expected cement demand to grow between 2 to 5 percent in its main markets.

"The situation in North America is improving, growth continues in emerging markets, and we see the first signs of recovery in Europe," Lafont told reporters.

He said stronger demand was most noticeable in Poland, Britain and Greece. In Greece, where public works are restarting, Lafarge now sees cement volumes growing 7 to 10 percent this year, up from the 0-3 percent growth previously expected. However, the construction sector remains subdued in France, weighing on aggregates and ready-mix volumes.

Lafarge's earnings before interest, taxation, depreciation and amortization (EBITDA) fell 2 percent to 812 million euros in the second quarter as sales fell 5 percent to 3.37 billion.

Lafarge said it expected a smaller hit from currency rates in the second half, after a 7 percent drag on both sales and EBITDA in the second quarter, largely because the currency comparison with the second half of 2013 will be less drastic.

Lafarge shares were 0.45 percent higher by 1024 GMT, outperforming the French blue-chip index, down 0.76 percent. ($1 = 0.7437 Euros)

(Editing by Andrew Callus/Ruth Pitchford)