UPDATE 2-IG Group says Q4 sales to boost annual profit

* Expects adjusted pretax profit of 125 mln stg vs 97 mln

* Sees tough H1 2010

* UK, Australian units perform better in Q4 vs Q3

* Shares up 10.4 pct (Adds detail, CEO comment, share price)

By Lorraine Turner

LONDON, June 9 (Reuters) - Britain's biggest spread-betting firm IG Group (IGG.L) expects full-year profits to rise by 29 percent after reporting higher revenues in the fourth quarter, boosting shares by as much as 10.4 percent.

Gains in the fourth quarter reversed a slump in its revenues in the previous three months in the UK and Australia, lifting total revenue by 9 percent year-on-year to 150 million pounds ($240.8 million) in the UK. [ID:nLA632913]

A strong rally in equity markets led to higher client trading in the fourth quarter, despite a fall in volatility in the equity and forex markets, said IG.

"This improvement in rate of growth was achieved despite significant reductions in the level of market volatility," said the company in a pre-close trading statement.

However the company warned that the first half of 2010 will be tough given the high levels of market volatility in the first half of 2009.

"This is the nature of the business and our forecasts always err on the side of caution," said analysts at Daniel Stewart & Co, describing IG's statement as positive.

IG expects an adjusted pretax profit of 125 million pounds in the year ending May 31 compared to 97 million in the same period last year. Revenues jumped nearly 40 percent to 257 million pounds.

However some analysts warn on the long-term picture for IG due to increased competition in the spread betting sector which is set to dent revenues per client and push marketing costs higher.

Revenues at the group's Japanese unit were hit earlier on in the year by increased competition in the market, however there will be no effect from a possible restriction on leverage for forex trading in Japan in the current financial year, IG said.

"There will be no impact until the middle of the next financial year, and by that stage we will have considerably changed the mix of the business," Chief Executive, Tim Howkins said on a conference call.

The Financial Services Agency in Japan is proposing to introduce rules to limit the amount of leverage which can be offered to retail forex speculators in Japan.

The company, which derived its name from 'Investors Gold Index' after being founded as a gold trading platform in the seventies, said clients opened 74,000 accounts in the year, bolstered by its acquisition of Japan's FXOnline in September [ID:nLO733037]

Credit criteria was tightened in the second half, leading to charges for doubtful debts being below 3 percent of revenue, IG said, against 12 percent of revenue in the first half.

But some analysts said the tighter credit criteria resulted in fewer bets being placed by the group's top clients in the third quarter, leading to a drop in revenues.

At 0820 GMT, IG Group shares were up 10.45 percent at 240.5 pence. ($1=.6230 pounds) (Editing by Victoria Bryan and Mike Nesbit)