UPDATE 1-Delta H1 trading profit better than forecast

* Sees strong H2 trading, but below H1

* Says H1 earnings may not fully reflect improved trading

* Shares rise 2 pct (Adds details)

July 14 (Reuters) - British industrial engineer Delta Plc (DLTA.L) said its first-half trading profit grew more than it expected due to resilient market conditions, and that it saw strong second-half trading, but below first-half levels.

First-half earnings, however, will not fully reflect the improvement in trading profit due to higher tax rates and lower interest income on cash balances, the company said.

Delta said strong volumes at its engineered steel products and electrolytic manganese dioxide businesses, and favourable selling prices contributed to the improvement in trading profit.

"The group's half year trading, quote activity and order intake mitigate somewhat our earlier caution about the group's prospects for the full year," it said in a statement. The company said it saw second-half margins reducing modestly, with selling prices for engineered steel products expected to reflect lower steel costs. Delta shares were up 2 percent at 121.5 pence at 0742 GMT. (Reporting by Kumar Alagappan in Bangalore; Editing by Anne Pallivathuckal)