(Reuters) - National Australia Bank ( NAUBF ), the country's largest business lender, cautioned about volatility due to "dramatic" shifts in global economic policies on Wednesday while reporting better-than-expected first-half cash earnings which sent its shares up nearly 4%.

NAB joins peer Westpac in echoing concerns around shifting global trade policies which have rattled markets in the past few weeks.

"I expect unpredictability and volatility to persist for a while now, and this uncertainty may be uncomfortable for businesses and households," chief executive Andrew Irvine told reporters on a conference call.

"Business owners are being cautious around pulling the trigger in terms of getting extra borrowing," he added.

However, Irvine said the weekend's election outcome brings stability for Australia and the economy's strong fundamentals provide scope for more rate cuts to help offset any potential global headwinds.

The Reserve Bank of Australia delivered its first interest rate cut in more than four years in February and markets are currently pricing in another 25-basis-point rate reduction by the central banks at its May 20 meeting.

NAB posted a 1% rise in cash earnings for the six months ended March to A$3.58 billion ($2.33 billion), beating Visible Alpha consensus estimate of A$3.48 billion.

The bank's shares jumped as much as 4.4% and were trading up 3.7% at a two-and-half-month high as of 0039 GMT, while the broader market was 0.1% higher.

Disciplined cost management, robust business lending, growth in customer deposits and higher treasury income aided the company's operational performance in the first half.

Housing lending volumes increased 3.2%, while its business and private banking arm logged 5.9% growth in lending.

NAB, also Australia's third-largest mortgage lender, said its net interest margin (NIM) - the difference between interest earned from lending and paid for deposits - was at 1.70% for the period, down 2 basis points from a year earlier but better than the consensus estimate of 1.69%.

Excluding the impact from its markets and treasury arm, the underlying margin was down 3 basis points due to higher deposit costs, including competitive pressures, higher funding costs and deposit mix impacts largely in Australia.

Analysts at Citi said that even though the results were a headline beat, there was some underlying weakness when considering a modest NIM miss from funding costs.

NAB raised its interim dividend by 1 cent to 85 Australian cents per share.

($1 = 1.5380 Australian dollars)