UPDATE 3-WPP sales decline moderates as confidence returns

* Q3 like-for-like revenue down 8.7 pct vs forecast 9.1 pct

* Total revenue 2 bln stg

* Says on target for H2 margin target

* Stock up more than 5 pct, top FTSE 100 gainer

(Recasts, adds quotes, detail, background, shares)

By Kate Holton

LONDON, Oct 30 (Reuters) - WPP Plc (WPP.L), the world's largest advertising group, said a decline in ad spending was moderating and corporate confidence was picking up, helping boost its shares more than 5 percent on Friday.

WPP, which includes Ogilvy & Mather and Hill & Knowlton, said the increased confidence was fragile and had not yet converted into increased ad spend, but said its job cutting programme and weaker comparatives would allow it to boost profits into 2010.

The group said like-for-like revenue fell 8.7 percent in the third quarter, beating the average analyst forecast of minus 9.1 percent in a Reuters poll and marking an improvement on the 10.5 percent fall reported for the second quarter.

It also reported an improvement in U.S. sentiment, which coupled with comments that group revenue was still expected to be flat in 2010, helped make its shares the top gainers in the UK's FTSE 100 index by mid session.

Chief Executive Martin Sorrell said there were signs of improving confidence among corporate clients. "People feel better, their hearts and minds are better, but it hasn't been reflected in increased spending yet," Sorrell told Reuters. "But it is much less worse in the United States. The down draft is slowing.

Like-for-like revenue was down 6.1 percent in the United States, compared with a fall of 9.4 percent in the first quarter and 11.3 percent in the second.

The performance by WPP, which has the likes of Unilever, Vodafone, HSBC and Ford as clients, also compares favourably with rivals such as Omnicom (OMC.N) and Interpublic Group (IPG.N), which have been hit by a drop in corporate spending.

SOME GROWTH

WPP, which has responded to the downturn by cutting headcount by 10 percent this year, said it expected the improvement in trading to continue and result in a flat revenue performance for 2010.