UPDATE 2-WS Atkins profit beats expectations, shares rise

* Adjusted pretax profit 100.2 mln stg vs forecast 97.3 mln

* Total dividend 26 pence, up 8 percent

* Does not see further decline in British economy

* Shares up over 5 percent, hit highest since early May

(Adds detail, CEO and analyst comment, shares)

By Ben Deighton

LONDON, June 17 (Reuters) - British engineering consultancy WS Atkins Plc (ATKW.L) reported a 9 percent rise in full-year pretax profit on Wednesday, beating analyst expectations and sending its shares to their highest level in more than a month.

It said it performed well in sectors which have seen less impact from the economic downturn such as defence and oil and gas, while the market was stabilising in areas worst hit by the recession, the Middle East and UK building design.

Pretax profit before exceptional items of 100.2 million pounds ($164.7 million) compared with an average of 97.3 million expected by 11 analysts polled by Reuters.

"(The UK economy) will be bumping along with minor improvements ... (and) with some minor downturns, for probably the next two years," Chief Executive Keith Clarke told reporters on a conference call. "I don't think it'll get worse, it may get a bit better."

The group also said it sees liquidity returning to its Middle East region, where it saw clients delaying bill payments during the year.

Atkins shares were up 5.1 percent to 566-1/2 pence by 0802 GMT, having risen as high as 575p -- their highest since May 8 -- outperforming the FTSE Mid-Cap index .FTMC which was down 0.5 percent.

Brokerage Panmure Gordon said while concerns about its Middle East exposure and general UK demand trends would remain dominant issues, it reiterated its "buy" stance due to the wide spread of its operations.

"Atkins, with its multi-skilled and multi-local offering, retains sound diversified characteristics," analysts at Panmure said in a note to clients.

Atkins plans a final dividend of 17.25 pence, making a total 26.0 pence, up 8 percent.

During the second half of the year, the company laid off about 1,200 staff, mostly in its UK and Middle East commercial and residential property-facing businesses. (Editing by David Holmes)