UPDATE 2-TP ICAP sees slow start to H2 as COVID-driven volumes ease, shares tumble

* Company says H2 has started slowly

* July activity materially lower than 2019 levels

* H1 underlying pretax profit rises

* Shares fall 10.3% (Adds CFO quote, shares, outlook, background)

Aug 7 (Reuters) - The world’s largest inter-dealer broker TP ICAP signalled on Friday that the surge in trading volumes caused by the COVID-19 pandemic was tailing off, adding that turnover in July was materially lower than a year ago.

Shares in the company slid 10.3% to 301.6 pence and were at the bottom of the FTSE midcap index by 0832 GMT.

TP ICAP, which brings together buyers and sellers in financial, energy and commodities markets, maintained its full-year guidance of low single-digit revenue growth and said the targeted investment it announced in March will also be partially deferred.

A combination of brokers Tullett Prebon and ICAP, the company acts as a go-between for banks and big investment houses in daily trading and tends to benefit from market volatility.

“It’s the first time people are getting out of the office and taking vacations so I think we are having a little bit of a pause because of that,” Chief Financial Officer Robin Stewart told Reuters.

He added that the company was expecting its fourth-quarter to bounce back relative to the prior year, with factors like the U.S. election, Brexit finalising and continuing trade tensions drawing in traders.

TP ICAP had achieved record-breaking trading volumes earlier this year helped by the crash in oil prices and market turmoil triggered by the coronavirus crisis.

The stock market’s main gauge of volatility, the CBOE Volatility Index, has surged 65% so far this year, hitting a more than decade high in mid-March. It has fallen around 70% since then.

London-based TP ICAP said underlying pretax profit was 136 million pounds ($178.55 million) for the six months ended June 30, compared with 134 million pounds a year ago.

$1 = 0.7617 pounds Reporting by Tanishaa Nadkar in Bengaluru; Editing by Sherry Jacob-Phillips, Rashmi Aich and Emelia Sithole-Matarise