UPDATE 2-Speedy Hire says trading remains tough; shares fall

* Says trading in early FY10 remains challenging

* FY adj pretax profit falls 29.5 pct to 33.9 mln stg

* FY revenue rises 2.3 pct to 476.1 mln stg

* Total dividend falls 35.4 pct to 12.8p

* Shares fall as much as 10 pct (Recasts; adds CEO comments, details)

May 27 (Reuters) - British tool hire company Speedy Hire Plc (SDY.L) reported a 29.5 percent fall in profit on Wednesday, reflecting the downturn in construction, and said trading continued to be tough, sending its shares down as much as 10 percent.

The company, which hires out everything from tools to portable accommodation and compressed air pumps, said the last few months had been tough, with a severe contraction in general construction activity that caused the cancellation or deferral of projects.

"With trading currently remaining subdued, the board is more cautious about the group's short term outlook," Chairman David Wallis said in a statement.

Adjusted pretax profit fell to 33.9 million pounds for the year ended March 31, from 48.1 million pounds in the year-ago period.

Revenue rose 2.3 percent to 476.1 million pounds.

Analysts on average had expected adjusted pretax profit of 33 million pounds on revenue of 462.74 million pounds, according to Reuters Estimates.

The company said it would pay a final dividend of 6.4 pence per share, bringing down the total dividend for the year to 12.8 pence per share from 19.8 pence per share last year.

SIGNS OF STABILITY

Speedy Hire said there were a few early signs suggesting that the market might be entering a relatively more stable environment.

"We have seen every part of our business have an uptick in revenues in May," Chief Executive Steve Corcoran said in a media conference call.

But it is more an encouraging sign of stability than a recovery, he said.

He said the company would look into the opportunity to buy customer in-house equipment fleets, but added, "We are not looking at general M&As right now."

The company's shares, which have gained 65 percent of their value in the last three months through Tuesday, fell as much as 10 percent in early trade. They later pared some of the losses and were down 3.3 percent at 182 pence at 0925 GMT on the London Stock Exchange. ($1=.6264 Pound) (Reporting by Purwa Naveen Raman in Bangalore; Editing by Gopakumar Warrier)