UPDATE 2-DNB capital position improves as profit tops forecast

* Q2 net profit NOK 4.6 bln beats forecast of 3.8 bln

* Posts NOK 1.1 bln gain on derivatives contracts

* Tier 1 capital 9.6 pct at end-June from 9.3 pct end-March

* Shares rise 2.2 pct (Recasts, adds analyst, detail, share)

By Victoria Klesty

OSLO, July 12 (Reuters) - Solid second-quarter earnings helped DNB to make progress towards meeting its capital goals, reducing the chances that Norway's biggest bank will need to raise capital or cut its dividend again.

DNB, one of the biggest lenders to the struggling shipping industry, beat forecasts with a 29 percent rise in second-quarter net profit on Thursday, as gains on derivatives contracts and lower-than-expected loan losses offset a disappointment on net interest income.

Its common equity Tier 1 capital ratio, calculated according to the Basel II transitional rules, increased to 9.6 percent at the end of June, up from 9.3 percent by end-March.

Local regulators have told banks to hold at least a 9 percent core Tier 1 capital by mid-year. To improve its capital position DNB cut its dividend earlier this year and said it aimed for 10 percent Tier 1 capital by the end of 2012.

"While we have argued that DNB will not raise additional capital, there have been some investor concerns. These concerns should be diminishing after a strong Q2," Bank of America analysts said in a note to clients.

DNB shares were up 2.2 percent at 1135 GMT, outperforming a 0.4 percent drop in the Oslo benchmark index.

Norway's banks are among the most stable in Europe, with only indirect exposure to the countries most affected by the euro zone debt crisis.

While DNB is heavily exposed to the global shipping industry, where low charter rates and falling asset values have caused a surge in bankruptcies, it has so far escaped relatively unscathed, saying it has focused on high-quality clients with relatively solid track records.

The bank had loan losses of 685 million Norwegian crowns ($112 million) in the quarter, up 227 million crowns from a year ago, but lower than the 865 million crowns expected by analysts.

"There was a stable and relatively low level of write-downs within shipping in spite of challenging market conditions in parts of this segment," DNB said.

Quarterly net profit rose to 4.58 billion Norwegian crowns from 3.55 billion crowns a year earlier, beating market expectations of 3.81 billion crowns.

The figure includes a 1.1 billion crown fair-value adjustment gain from basis swap derivatives, reversing some of the negative impact from 2.4 billion crowns of losses from such contracts in the first quarter.

Meanwhile, DNB's net interest income rose to 6.63 billion crowns from 6.05 billion in the April-June period last year, shy of analysts' mean forecast for 6.71 billion. The bank blamed rising long-term funding costs and narrower deposit spreads.

($1 = 6.1100 Norwegian crowns) (Reporting by Victoria Klesty; Editing by David Goodman and Mark Potter)