H1 underlying profit up 3.7 pct Sees FY17 underlying profit up...

• H1 underlying profit up 3.7 pct
• Sees FY17 underlying profit up at least 7 pct
• Result and guidance in line with analyst forecasts

(Adds analyst comment, share price performance)

MELBOURNE, Feb 9 (Reuters) - AGL Energy Ltd (AGL), Australia's no.2 power retailer, benefited from rising electricity prices in the first half of this financial year and said on Thursday it expected them to climb further, offsetting pain in its gas business.

Australians are paying more for electricity as the country expands its use of wind and solar power to help cut carbon emissions. At the same time gas price spikes, due to rising liquefied natural gas exports, are squeezing profit margins for retailers, like AGL, who have to buy gas to supply customers.

AGL reported a 3.7 percent rise in underlying profit for the six months to December to A$389 million ($297 million). The result was roughly in line with two analysts' forecasts.

"In our electricity portfolio, the impact of rising wholesale prices is expected to continue," AGL Chief Executive Andy Vesey said in a statement.

AGL said its full year underlying profit would land in the upper half its forecast range of A$720 million to A$800 million, up from A$701 million last year, which is in line with market forecasts.

"Our guidance continues to take into account the headwinds in our gas portfolio that we have previously flagged," Vesey said, pointing to supply disruptions in the September quarter and weaker demand during a mild winter.

AGL's shares have risen 22 percent over the past year, outperforming a 14 percent rise in the broader market (xjo), but analysts did not expect the shares to rise on Thursday, following the results.

"While upgrades to outer years are likely as the sell side re-calibrates for the surging wholesale power prices, we suggest the result, while a pretty solid one, is unlikely to be enough to justify AGL's current valuation," RBC analyst Paul Johnston said in a note on the results.

AGL raised its half year dividend to 41 cents a share from 32 cents a year ago. That compared with a forecast of 43 cents from Citi.

($1 = 1.3087 Australian dollars)