UPDATE 4-W.R. Grace profit beats on emerging market sales

* Q2 adj EPS $1.11 vs. Wall Street estimate 89 cents

* Revenue up 21 percent to $826.4 million

* Raises 2011 revenue target; CFO sees strong second half

* Shares up 12.9 percent in morning trading (Updates share activity)

By Ernest Scheyder

NEW YORK, July 26 (Reuters) - Bankrupt chemicals maker W.R. Grace & Co (GRA.N) reported a 49 percent rise in second-quarter profit because of emerging market sales of its construction products and catalysts for oil and chemical refiners.

The company's shares rose 12.9 percent to $51.71 in morning trading.

W.R. Grace filed for bankruptcy a decade ago. The company asked a Delaware judge last month to approve the company's exit. [ID:nN31243349]

"We're just waiting for the judge to issue his ruling," W.R. Grace Chief Financial Officer Hudson LaForce told Reuters. "We're confident, as we've always been, that he'll rule in our favor."

Earlier this week a judge allowed W.R. Grace to bid in a secret auction for an acquisition that the company previously said could "significantly" bolster its business. [ID:nN1E76O1AW]

Because it is bankrupt, W.R. Grace needed permission to participate in the auction. The judge also sealed the would-be seller's identity.

Dow Chemical (DOW.N) is selling its polypropylene licensing and catalyst business, according to sources familiar with the matter. [ID:nN1E75K087]

LaForce declined to comment on the auction on Tuesday, except to say that any deal would add to the company's core business.

QUARTERLY RESULTS AND OUTLOOK

Net income rose to $75.8 million, or $1 per share, from $51 million, or 69 cents per share, a year earlier.

Excluding one-time items, including costs from an asbestos legal settlement, Grace earned $1.11 per share. By that measure, analysts expected a profit of 89 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 21 percent to $826.4 million.

Much of the quarter's strength came from sales to emerging markets, LaForce said.

Growth in the United States construction market was "positive, but just barely" in the second quarter, he said.

Emerging market economies are growing well with many construction spending and infrastructure projects, LaForce said.

For 2011, Grace expects revenue of $3.25 billion to $3.3 billion. It previously forecast $2.85 billion to $2.95 billion.

"We think the first half is representative of what the whole year will be," LaForce said. (Editing by Dave Zimmerman, Derek Caney and Robert MacMillan)