UPDATE 2-Trinity Mirror cost cuts pay off in H1, shares jump

* H1 revenue flat, operating profit up 25.7 pct

* Outlook cautious but confident

* Trinity Mirror shares up 14.52 pct, outperforming index

(Adds CEO, analyst comments, shares, details, background)

By Georgina Prodhan

LONDON, July 29 (Reuters) - British newspaper publisher Trinity Mirror (TNI.L) reported a leap in first-half profits driven by cost cuts and helped by improving advertising trends, beating market expectations and lifting its shares more than 14 percent.

The publisher of the popular daily Mirror tabloid said national advertising revenue picked up by 2.2 percent in the first half but advertising at its regional newspapers fell 8 percent as recruitment and property sales remained weak.

Shares in Trinity Mirror were up 14.52 percent at 86.75 pence by 0849 GMT, nearing a one-month high of 91.75 pence and outperforming a 1.17 percent stronger European media index .SXMP.

Earlier this week, rival Daily Mail & General Trust (DMGOa.L), led by the Daily Mail title, reported a 13 percent rebound in national advertising (including the free London Metro) and a 4 percent decline in its mainly rural regionals. [ID:nLDE66P1QK]

Trinity Mirror said on Thursday it was making progress towards the reinstatement of dividends. Chief Executive Sly Bailey told journalists this would depend on greater stability in ad sales, and evidence of a sustainable economic recovery.

"Although we acknowledge structural issues within the regional press, and competitive pressure in Trinity's national business, we see scope for a cyclical rebound in the majority of Trinity's revenues," London brokerage Numis wrote in a note.

Trinity Mirror said national advertising would be flat in July, with regionals' revenue dropping 9 percent, but said the general trend was positive.

It raised its 2010 cost-savings target to 25 million pounds ($39 million) from 20 million pounds and said it had achieved 15 million pounds of this in the first half. The company is cutting about 200 jobs at its newspapers.

Earlier this year, Trinity Mirror took the first step in consolidating Britain's regional newspapers, which have all been devastated by a loss of classified advertising revenue, by buying Guardian Media Group's local newspapers.

Bailey said she was in favour of more consolidation at the right time and price, but declined to comment further.

Total revenue for the six months to end-June was flat at 382.2 million pounds, in line with the Thomson Reuters StarMine SmartEstimate of 383 million pounds. SmartEstimates weight analysts according to their past accuracy.

Operating profit rose 25.7 percent to 61.7 million pounds, beating the SmartEstimate of 55 million pounds, while earnings per share rose to 13.8 pence from 8.7 pence, beating the SmartEstimate of 12.08 pence.

Trinity Mirror said its pension deficit rose to 324.7 million pounds from 296.6 million at the end of 2009. (Reporting by Georgina Prodhan; Editing by Sharon Lindores) ($1=.6402 Pound)