* Operating profits decline 7 percent
* Oil and gas division input grows by 40 percent on U.S. shale
* Mining hit by South Africa strikes (Recasts, updates throughout)
By Ron Bousso
LONDON, July 31 (Reuters) - British engineering firm Weir Group reported on Thursday a 7 percent fall in first-half operating profits as the impact of a strong pound outweighed a booming U.S. shale business.
Weir, which makes pumps and valves for the mining, oil and gas industries, saw 10 percent growth in orders to 1.24 billion pounds in the period ended July 4.
Operating profits were down 7 percent to 201 million pounds.
Earnings per share fell 8 percent to 61.4 pence while its share dividend rose 70 percent to 15 pence, which will represent around one third of its full year dividend.
Weir shares were down 3.19 percent at 2,585 pence at 0747 GMT, compared with a 0.87 percent decline in the oil and gas index.
"Healthy orders and revenue are encouraging but the margin performance is slightly concerning," said Matthew Spurr, analyst at Espírito Santo Investment Bank.
The value of new business in Weir's oil and gas division, which has a strong position in U.S. shale, rose 40 percent to 499 million pounds as the recovery in the North America market accelerated.
Growth was focused mostly on the unconventional shale oil production, known as fracking, in the oil rich oil basins, particularly the Permian.
Operating profits in the oil and gas division was up 27 percent at 98 million pounds. Full year margins are expected to be in line with expectations, Weir said.
The minerals division continued to be challenged by the weak condition in the sector, with equipment orders slumping 27 percent year-on-year, "reflecting the absence of greenfield projects and customer caution in committing to brownfield expansions."
Growth in the sector was expected to continue to be impacted by the metalworkers strike in South Africa, which closed Weir's manufacturing operations and resulted in an estimated 3 million pound loss in July.
"We anticipate strong revenue and profit growth in the second half of 2014, assuming no further deterioration or disruption in mining end-markets," Chief Executive Keith Cochrane said in a statement. (Reporting by Ron Bousso; editing by Jason Neely and John Stonestreet)