UPDATE 1-Climate Exchange trading soars, expands overseas

(Adds analyst comment, updates share prices)

LONDON, July 16 (Reuters) - British carbon credit exchange operator Climate Exchange Plc (CLIE.L: Quote, Profile, Research) said on Wednesday that trading volumes at its two main exchanges rose from a year ago, and it made progress with international expansion plans.

Climate Exchange owns, operates and develops exchanges to facilitate trading in environmental financial instruments such as emissions reduction credits.

Its two main businesses are the European Climate Exchange (ECX), which mostly trades compliance permits under the European Union's Emissions Trading Scheme, and the Chicago Climate Exchange (CCX), which predominantly trades unregulated voluntary emissions reduction credits.

First-half trading volumes on the ECX gained 250 percent from year-ago volumes, while volumes on CCX advanced almost 400 percent in the same period, the company said.

"Everything is developing according to what we were expecting," said Morgan Stanley analyst Luciano Diana, who views Climate Exchange as the largest pure-play exchange in the fast growing carbon market.

"Its true value lies in the U.S., where I have almost no doubt there will be a proper carbon trade market beyond 2012." He has a neutral recommendation on the stock and a price target of 1900 pence.

Climate Exchange shares rose 2 percent to 1795 pence at 0950 GMT.

Still, in a March note, Diana expressed doubts over CCX's long-term potential.