* H1 pretax profit beats market expectations
* Sees 2014 sales growth 'well above' 3 percent
* Says sanctions against Russia will hit business in H2
* Shares up 1.6 pct (Adds CEO comments, analyst reaction, shares)
By Paul Sandle
LONDON, Aug 26 (Reuters) - WPP, the world's largestadvertising company, reported stronger than expected profitgrowth on Tuesday and its founder said clients were growing moreconfident about their business prospects.
Martin Sorrell said business was very strong in Russia inthe first half of 2014, but he expected it to weaken in thesecond half as Western sanctions against Moscow over theconflict in Ukraine start to bite.
He said the situation in Ukraine and the impact of theWest's stand-off with Russia had replaced the health of the eurozone as the major geopolitical worry.
"Anxiety is heightened so it will make clients morecautious," he said in an interview on Tuesday. "It's verydifficult to see a way through these current problems betweenRussia and the rest of the world over Ukraine."
But those concerns were outweighed by a small improvement inthe global economy, which was encouraging companies to spendmore of their ample cash reserves.
WPP reaffirmed its sales growth and profitability targetsfor the year.
Its shares were trading up 1.6 percent at 1,247 pence at0735 GMT after earlier hitting a seven-week high of 1,269 pence.
Sorrell has built WPP into the world number one by acquiringcompanies in the fast-growing digital advertising sector, andwas a step ahead of rivals in moving aggressively into fastergrowing markets in the Asia-Pacific region and elsewhere.
It has also benefited from a failed merger attempt by rivalsOmnicom and Publicis - Sorrell says hisagencies picked up clients and staff from the two companieswhile they were wrapped up in the details of the alliance.
WPP posted adjusted pretax profit of 532 million pounds($882 million), up 1.5 percent on a constant-currency basis.Analysts had expected pretax profit of 521 million pounds.Organic revenue grew 4.1 percent.
Sorrell said like-for-like revenue grew in all markets, withthe United States, Britain and Asia Pacific strong, helped bygrowing demand for digital advertising.
Organic net sales in the second quarter rose 4.4 percent, animprovement on 3.8 percent in the first quarter. Sorrell saidgrowth for the year would be "well over" 3 percent. The grouphad previously guided for growth of at least 3 percent.
Analysts at Numis, who have an "add" recommendation on WPP,said the results were slightly ahead of their expectations, butleft their full-year profit forecast unchanged at 1.49 billionpounds due to the impact of currency swings on profit margins.
WPP, which employs nearly 180,000 people, said its net salesmargin for the first half was 13.0 percent. That was in linewith its full-year target of a 0.3 percentage point improvement.
($1 = 0.6029 British Pounds) (Editing by Tom Pfeiffer)
WPP (WPP)
