British spread-betting company IG Group said first-half revenue should rise 23 percent, with trading volumes lifted by market volatility.

Following on from a strong first quarter, the group has continued to experience high levels of client activity during the second quarter of its financial year, IG on Tuesday.

The company expected first-half revenues of more than 193 million pounds, adding costs had been in line with management expectations.

IG Group issued a profit warning in January after weak trading volumes at the end of 2010. It has since recovered as traders have flocked back, with clients looking to bet on large swings in financial markets caused by uncertainty surrounding the euro zone's sovereign debt crisis.

IG, which says it is the world's biggest spread-betting company by revenue, competes with unlisted rivals such as City Index and CMC Markets.

Its shares up 3.4 percent at 448.4 pence in early trade, giving IG a market capitalisation of around 1.6 billion pounds. The stock was one of the best performers on the FTSE 250 mid-cap index <.FTMC>.

At first sight, the better revenues imply a mid single-digit earnings upgrade to our current financial year estimate, brokerage Canaccord Genuity said in a research note, keeping a buy rating on IG Group shares.

(Reporting by Sudip Kar-Gupta; Editing by Dan Lalor)