Last checked at 
* Says forex trading last month up 22 pct from Jan 2012
* Bond trading up 16 percent
* Forecasts annual profit in line with expectations
* Shares down 1.2 pct, having jumped on Weds to 7-month high
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By Luke Jeffs
LONDON, Feb 7 (Reuters) - Brokerage ICAP said it hadfound no signs of telltale "wash trades" used by banks to rewardbrokers for their help rigging interest rates, in the firm'slatest move to distance itself from the Libor scandal.
ICAP Chief Executive Michael Spencer said on Thursday theBritish group was conducting an internal probe into possibleinterest rate-fixing and was sharing relevant information withwatchdog the Financial Services Authority (FSA).
"We haven't found any wash trades that we've been involvedin," said Spencer, speaking after ICAP - which acts as anelectronic intermediary between the world's largest investmentbanks - reported a positive start to the year marked by sharpupturns in foreign exchange and bond trading.
So-called wash trades, where banks make fake trades to paybrokers through commissions, have emerged as one of the mainways in which banks have sought to reward brokers who helpedthem fix interest rates.
Global regulators said on Wednesday wash trades werefrequently used by derivatives traders at Royal Bank of Scotland - fined $612 million for its role in the Libor scandal -to reward brokers for their help in influencing Libor setting byother banks.
ICAP had said on Jan. 24 one of its subsidiaries was thesubject of an FSA investigation over rate fixing and Spencer onThursday confirmed one employee had been suspended and anotherthree put on administrative leave in connection with the probe.
But he said these measures were for actions by individualsand sought to distance the company from them.
More than a dozen banks and brokerages, including JP Morgan, Deutsche Bank and Citigroup, are stillbeing probed over the manipulation of rates such as Libor, orLondon interbank offered rate, which is used to price trillionsof dollars of loans.
INDIVIDUAL BROKERS
ICAP does not contribute to the Libor-setting process butregulators have called into question the role that individualbrokers, at ICAP and rival firms, may have played as conduits toaid manipulation by traders working at investment banks.
The fine on RBS made it the third global bank to be punishedfor rate-fixing. Switzerland's UBS AG agreed inDecember to pay penalties of $1.5 billion and Britain's Barclays paid regulators $453 million last summer.
Spencer's comment on wash trades came as ICAP reported foreign exchange trading last month was up 22 percent fromJanuary 2012, while bond trading rose 16 percent. The groupforecast annual profit in line with expectations.
By contrast, in the three months through December, currencyand bond trading had fallen 9 percent to a daily average of $664billion.
The brokerage said it expected pretax profit for the yearthrough March to be within the range of analyst forecasts ofbetween 280 million pounds ($438.3 million) and 305 million.
"While December was even slower than expected, we've seen amarked improvement in trading volumes since the beginning ofJanuary across our entire business, although it is premature totell if this is the start of a more sustained upturn," saidSpencer.
Shares in the company were down 1.2 percent to 352 pence at1145 GMT, having jumped on Wednesday to their highest level insome seven months.
