UPDATE 2-Greene King profit beats view; summer trade strong

* Profit down 15 pct; May/June figures better

* To use rights issue funds for acquisitions

* Shares up 3.1 pct

(Adds company, analyst comment, shares, details)

By Rhys Jones

LONDON, July 2 (Reuters) - British pubs group Greene King (GNK.L) posted a smaller-than-expected fall in full-year profit and said recent trade had improved, driven by increased food sales and sunnier weather, sending its shares higher.

Greene King, which has around 2,500 pubs in England and Scotland, on Thursday said pretax profit for the year to May 3 fell 15 percent to 118.5 million pounds ($194.8 million) on revenues 1.3 percent higher at 954.6 million pounds.

Analysts expected a profit of 116 million pounds, according to Reuters Estimates.

"Mortgage costs have come down and the cost of living has come down a bit too, which has helped. Whether this is green shoots of recovery I don't know because we're still cautious on the unemployment outlook," Greene King Chief Executive Rooney Anand told reporters on a conference call.

Shares in the group, which have risen by a third so far this year, were up 3.1 percent at 422.75 pence by 0822 GMT, valuing it at around 833 million pounds.

The Suffolk-based group held its final dividend at 15.1 pence per share and said it would pursue a dividend policy of around two times underlying earnings in the future.

Greene King, which in April raised 207.5 million pounds through a rights issue to acquire pubs from struggling rivals and buy back debt, last month bought 11 pubs from Punch Taverns (PUB.L), Britain's biggest pubs operator, but said it was in no rush to spend more.

"We'll be opportunistic in how we allocate funds but we won't spend at such a great pace that we undermine our value," said Anand. "We are seeing assets being offered to us that would not, under normal circumstances, be offered."

Punch Taverns and Marston's (MARS.L) have both launched rights issues in the last month.

"Greene King has the firepower to take advantage of developing opportunities," said KBC analyst Paul Hickman, who upgraded the company to "buy" from "hold".