Exporters growing more worried about Sterling strength - survey

LONDON (Reuters) - Britain's exporters have become more worried about the strengthening of the country's currency, a survey showed on Tuesday, although many companies still saw a rise in export orders.

Britain's economy slipped back into recession around the turn of the year and the ongoing turmoil in the euro zone -- the country's main export market -- has increased fears that demand for British products abroad may falter.

The DHL/BCC Trade Confidence Index -- based on a survey of the British Chambers of Commerce of nearly 2000 firms -- showed that in the last quarter 40 percent surveyed said that the exchange rate was weighing on expectations, up from 34 percent in the first quarter, reflecting the fact that Sterling had strengthened by over four percent between the first and second quarter of this year.

"SMEs' concerns around exchange rates and profitability highlight that there is still more to be done in terms of support for British businesses who are venturing into overseas markets," said Phil Couchman, CEO of DHL Express UK and Ireland.

The survey showed that the share of firms who thought profitability would increase over the next 12 months fell.

"Business concerns about the euro zone have increased in the last quarter," said John Longworth, director-general at the British Chambers of Commerce.

"But there is a silver lining," he said. "Businesses have seen an increase in export orders in the last quarter, despite concerns about the euro zone."

"More than half of British exports in the three months to May went to countries outside the EU, an increase of 13 percent on the same quarter last year," he said.

Another business survey by bank Lloyds TSB Commercial showed similar trends, with fewer companies saying exports would continue to increase in the second half of this year.

Businesses were overall a touch more confident in the June survey than in January, though confidence was still not back to levels witnessed in the preceding two years and many firms still worried about domestic demand, Lloyds said.

"While confidence among businesses has improved since January, the majority of UK businesses are still keeping investment on hold," the bank said.

(Reporting By Venetia Rainey; editing by Ron Askew)