Arriva the biggest operator of London's double-decker red buses, flagged further acquisitions in Europe and said it was confident about the rest of the year despite high fuel costs. It gave no specific forecast.

"I think we are reasonably well positioned in the second half, we are moving along with confidence," Chief Executive Bob Davies told Reuters. He said mainland Europe would be the focus for growth.

Operating profit for the six months to June 30 was 57.6 million pounds, compared with 58.8 million pounds a year ago.

The result compared with a consensus market forecast of 58.4 million pounds, according to figures provided by the company.

Arriva shares were steady at 572 pence shortly after the market opened at 8:03 a.m.

Arriva increased profits at its UK bus operations despite a 3 million pound rise in fuel costs in the period. Davies said the division's fuel bill would be 14 million pounds higher in 2006.

He also said its main bus operations were not affected by July 7 bombings in London, although its open-top tourist bus business did not perform well in July.

The main dent in Arriva's performance was the end of its Northern rail franchise in December 2004 which almost halved profits at UK rail.

Analysts said the main focus would be on growth in mainland Europe. Arriva has operations in Denmark, Germany, Italy, the Netherlands, Portugal, Spain, Sweden and the UK.

"Mainland Europe remains the key strategic differentiator and future growth driver with good progress demonstrated and new opportunities continuing to emerge in Sweden, Germany and Holland," Citigroup told clients in a note.

The continental European market has seen less of its bus and train services privatised than the UK and is worth an estimated 70 billion pounds.