UPDATE 3-UK baker Greggs hit by soggy July but profits rise

* 6 weeks to Aug 8 like-for-like sales flat, H1 up 1.5 pct

* Forecasts "marginally positive" lfl sales growth in H2

* H1 pretax profit 16.5 mln stg vs 15.4 mln stg

* Shares up 0.5 pct

(Adds detail, CEO, analyst comment, shares)

By James Davey

LONDON, Aug 11 (Reuters) - British high street baker Greggs (GRG.L) said heavy rain in July had dented sales but it was confident it would continue to defy the recession with an array of promotional offers to draw in cash-strapped consumers.

The Newcastle-based firm, which sells sausage rolls, pasties, sandwiches, cakes and bread to over six million customers a week from about 1,400 outlets, said sales at stores open more than a year were flat in the six weeks to Aug 8, having been up 1.5 percent in the 26 weeks to June 27.

"With Greggs being on the high street we're probably more susceptible to wet weather than other retailers because if it's raining during the key lunchtime period then less people venture out," chief executive Ken McMeikan told reporters after the company posted a 7.3 percent increase in first-half pretax profit and raised its dividend by 6.1 percent.

Shares in Greggs, which have increased in value by 14 percent over the last three months, were up 1.6 pence at 413.5 pence at 0900 GMT, valuing the business at 420 million pounds.

McMeikan forecast "marginally positive" like-for-like sales growth in the second-half, expressing confidence consumers would warm to a new hot drink and muffin deal for 1.50 pounds which builds on the success of a 1.99 pounds meal deal and new products such as yum yums, Belgian buns and Mexican chicken savouries.

"With job insecurity and rising job losses ... people are still very keen to seek out the best value they can get from retailers and I think it will continue to be challenging right the way through the second-half," said the CEO, a former Tesco (TSCO.L) and Sainsbury (SBRY.L) executive.

Greggs's results were published as surveys showed the drop in house prices in England and Wales eased further in July and retail sales rose across Britain -- further signs the recession-hit economy is starting to find its feet again. [IDnLA052645]

The baker made a pretax profit of 16.5 million pounds ($27.23 million) in the first-half on total sales up 4.4 percent to 312 million pounds.

This compares with house broker UBS's forecast of a pretax profit of 15.8 million pounds and 15.4 million pounds in 2008.

The firm ended the half with net cash of 14.9 million pounds and is paying a record interim dividend of 5.2 pence, building on 24 consecutive years of dividend growth.

Greggs said the second-half should be boosted by lower ingredient and energy costs, while the company was beginning to benefit from initiatives to simplify and centralise the business, in preparation for accelerated expansion in 2010 after a net 10 store openings in 2009. [ID:nL1435664]

Prior to Tuesday's update analysts were forecasting a consensus underlying pretax profit of 45.5 million pounds for 2009, according to Reuters Estimates, versus 45.2 million pounds in 2008.

Analysts at UBS said they did not expect significant change to consensus numbers.

($1=.6000 Pounds)

(Editing by Rhys Jones and Rupert Winchester and Mariam Karouny)