Travis Perkins, Britain's largest distributor of building materials, forecast solid progress in 2012, after reporting a 37 percent rise in full-year profit that was at the top end of expectations and helped by market share gains.

Travis Perkins, also a home improvement retailer and which has developed a good forecasting record on the economy in recent years, said it expected its markets to remain tough in 2012.

Whilst the private sector is growing quite healthily, the amount of activity that is creating is not quite enough to offset the fall in public sector construction, chief executive Geoff Cooper told Reuters on Wednesday.

The company forecast a low single-digit decline in trade market volumes, reflecting a fall in the number of housing transactions in 2011 and a contraction in public sector expenditure as the government moves to cut its budget deficit.

Travis Perkins, whose brands include City Plumbing, Keyline, Tile Giant and Wickes, also predicted a more substantial decline in the consumer sector, reflecting low consumer confidence, rising unemployment and disposable incomes under pressure.

While a lack of consumption has been one of the main drags on economic growth, latest data showed retail sales rose in January.

That data, a string of strong business surveys and some stabilisation in the labour market have raised hopes Britain will avoid recession despite the economy having contracted in the last three months of 2011.

Travis Perkins made an underlying 2011 pretax profit of 297 million pounds, compared with a forecast for 287 million. Turnover rose 52 percent to 4.78 billion pounds -- up 6 percent on a like-for-like basis, a measure that slowed to 1.8 percent in the first seven weeks of 2012.

It said the full-year performance was helped by synergies from the 2010 purchase of plumbing and heating firm BSS, as well as market share gains.

Travis Perkins shares, up nearly a quarter in value over the past three months, were 6.2 percent higher at 6 a.m.. That valued the company at 2.6 billion pounds and made it one of the top gainers among London's top 350 stocks on the day.

With an attractive valuation and forecasts underpinned by the acquisition of BSS, we see further potential for good news from the shares, Panmure Gordon analyst Andy Brown said.

CEO Cooper said wishlist for finance minister George Osborne's March 21 budget statement included the re-introduction of mortgage interest tax relief for first-time buyers and measures to increase investment in infrastructure.

Travis Perkins, which ended 2011 with net debt of 583 million pounds, raised its total dividend 33 percent to 20 pence.

(Reporting by James Davey; editing by Rhys Jones)