By Deena Beasley

LOS ANGELES (Reuters) - Boyd Gaming Corp said on Friday that it would delay construction of its partially built Echelon casino project on the Las Vegas Strip, and investors concerned about a glut of new resorts in the city sent the company's shares up as much as 30 percent.

The construction delay overshadowed news that Boyd was suspending its quarterly dividend.

The company, whose shares had been falling for nearly a year, also announced a $100 million share repurchase program and posted lower second-quarter profit as the U.S. economic slowdown reduced gambling revenue.

Las Vegas-based Boyd said it had decided to delay the construction of the $4.8 billion Echelon, already built to around eight stories, because of the challenging economy. It plans to resume construction in three or four quarters, assuming credit market conditions and the economic outlook improves.

"We have been concerned about capital raising and returns on capital, and this change may lead to a reduction in scope or cancellation," Deutsche Bank analyst Bill Lerner said in a research note.

Developers have plans to add more than 40,000 luxury hotel rooms to the Las Vegas Strip -- about one-third more than today -- but scarce credit and the slowing U.S. economy have led to reassessment of some projects.

The Echelon delay "indicates the unprecedented downturn that Las Vegas is currently undergoing and the extreme difficulty in securing capital," Goldman Sachs analyst Steven Kent said in a research note.

"We continue to believe that the downturn should continue throughout the remainder of 2008 and into 2009," he said.