* Q2 core profit $2.45 bln vs expected $2.18 bln
* Includes $339 million gain from U.S. disposal
* Sees tough steel market conditions in H2
* Forecasts lower steel shipments in H2 than H1
* Shares up 2.3 pct on lack of negative surprises (Rewrites first paragraph, adds shares, analyst comment)
By Philip Blenkinsop
BRUSSELS, July 25 (Reuters) - ArcelorMittal, the world's largest steelmaker, forecast tough market conditions would continue into the second half of the year, particularly in Europe where it lowered its consumption forecast due to the severity of the slowdown.
Steelmakers globally are struggling with falling demand in Europe and Japan and slowing growth in China, the world's largest producer and consumer. The only bright spot has been a pick-up in the Americas.
"Market conditions in the first half have been very challenging, indeed more challenging than we had expected due to a combination of factors, not least the still unresolved crisis in the euro zone," Chief Executive Lakshmi Mittal said in a statement.
He added the company, whose second-quarter earnings were swelled by a divestment gain but were otherwise broadly in line with forecasts, expected operating conditions to be broadly similar in the second half.
"Europe remains our biggest concern and the severity of the situation is reflected in the performance of our European operations," Mittal said. "Our focus throughout the remainder of the year remains on further improving competitiveness and reducing debt."
The company cut its already sombre forecast for European steel consumption, saying it would fall by between 3 and 5 percent this year.
ArcelorMittal's second-quarter earnings were broadly in line with market expectations, when the one-off gain was removed. It forecast lower steel shipments in the second half of the year than in the first at similar earnings per tonne. Iron ore volumes are set to rise by at least 10 percent this year.
Chief Financial Officer Aditya Mittal said there should be some sort of technical rebound in the fourth quarter from the traditionally weak third, unless conditions further worsened.
ArcelorMittal shares were up 2.3 percent in early trading, although are still down 15 percent in the year to date and a third lower than at this year's peak set in early February.
"There is no negative surprise. Current sentiment for steel is extremely bad," said Hermann Reith, steel analyst at BHF Bank. "The results are in line and the shares have fallen so much. The guidance for the second half looks better than at first sight, mainly due to iron ore overcompensating for steel."
Weak steel sentiment has already been exemplified by Germany's Salzgitter AG, which warned last month that profits would fall sharply this year and its steel division would slip into a loss.
South Korea's POSCO, the world's fourth-largest steelmaker, said on Tuesday it expected the Chinese steel market to bottom out in the third quarter, but said the rebound would be weak.
ArcelorMittal, whose capacity is more than double that of its nearest rival, said it sold less steel in the second quarter than in the first three months, but at higher prices. It benefited from a rebound in iron ore mining volumes.
Quarterly core profit (EBITDA) reached $2.45 billion, against an average forecast of $2.18 billion in a Reuters poll.
The second-quarter number included a $339 million gain from the sale to Nucor Corp of U.S. specialist steel distributor Skyline Steel, part of its bid to bring down debt.
Stripped of that gain, reported first-half core profit was marginally below that of the second half of 2011. The company had forecast it would be higher.
For ArcelorMittal, there are echoes of the 2008-2009 crisis, even if the drop in demand is not as acute. Then as now, there is a focus on debt, which had risen in the first quarter.
The company said debt fell by $1.6 billion to $22.0 billion at the end of June and would drop more by the end of the year, with further disposals expected in the coming quarter.
On that theme, ArcelorMittal said on Wednesday it had agreed to sell its 48.1 percent stake in engineering company Paul Wurth Group to private SMS GmbH of Germany for 300 million euros. (Editing by Rex Merrifield and David Holmes)