Barclays shares dipped 2 percent as analysts said the investment bank performance was resilient but uninspiring, costs rose faster than expected and Spanish bad debts remain a worry. Rivals including HSBC, BNP Paribas and Lloyds have all shown sharp falls in bad debts as economies improve, although most banks remain wary that bumps could lie ahead.

Barclays said pretax profit in the six months to the end of June were 3.95 billion pounds ($6.3 billion), above an average forecast of 3.4 billion pounds from six analysts polled by Thomson Reuters. It included an 851 million pound gain on the value of its own credit, and underlying profit grew 22 percent to 2.96 billion pounds.

Bad debts fell by 32 percent to 3.08 billion pounds, despite a 433 million pound jump in losses on corporate loans in Spain, hurt by falling real estate valuations.

Barclays, which ranks as Europe's sixth-biggest bank by market value and didn't need bailing out during the financial crisis, said it would stick with its guidance that bad debts will drop by 15-20 percent from this year to as low as 6.5 billion pounds.

It said it was confident of being at the "good" end of that guidance and may beat it, but the outlook remained uncertain.

By 0717 GMT Barclays shares were down 2.1 percent at 332.8 pence, one of the weakest UK stocks.

"The numbers look good, but it's driven by Barclays Capital and that's on improving own credit gains rather than top-line growth," said Bruce Packard, analyst at Seymour Pierce.

BARCAP DIPS

Earnings at Barclays Capital, the investment bank arm headed by Bob Diamond, more than trebled from a year ago to 3.4 billion pounds. Excluding credit moves BarCap's profit rose 31 percent to 2.55 billion pounds.

But top-line income in the second quarter was 3.28 billion pounds, down 15 percent from the previous quarter.

BarCap's income growth lagged that shown by rivals such as Goldman Sachs during a buoyant first quarter, but its fall was more resilient during a tough second quarter for the industry, hit by the fallout from the euro-zone debt crisis. The average income fall in the industry was about one third, analysts estimated.

Diamond told reporters on a conference call there had been an improvement in activity in the second half of July compared with May and June.

The bank set aside 37 percent of BarCap's income to pay staff in the first half, compared with 38 percent for 2009, but said it will not decide bonus payouts until the end of the year.