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Q2 adjusted earnings per share $3.85 vs forecast $3.78

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Sees FY adj EPS of $15.40-$15.60 vs $15.30-$15.60 before

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Warns of sluggish industrial activity

(Rewrites with CFO and CEO quotes from call, background)

By Andrey Sychev and Bartosz Dabrowski

Aug 2 (Reuters) - Linde ( LIN ), the world's biggest

industrial gases firm, reported second-quarter earnings slightly

ahead of expectations on Thursday, helped by cost cuts and price

hikes, but struck a cautious tone about prospects amid flagging

industrial activity.

Following the strong quarter, the U.S.-German group said it

expected annual adjusted earnings per share of $15.40-$15.60, a

little more optimistic than previous guidance of $15.30-$15.60.

But Chief Financial Officer Matt White told a conference

call the group did not expect any further improvement.

"To some extent, in many countries in the world, we've been

in an industrial recession," he said of the last 18 months.

Linde ( LIN ) is seen as a bellwether for industrial production as

it supplies gases for a range of customers in sectors including

chemicals, manufacturing, steel-making, and food and beverage.

This diversity can help the company cope with weakness in

some end markets, as others can compensate. It has regularly

beaten earnings estimates or raised guidance in recent years.

Quarterly sales in the Americas, Linde's ( LIN ) biggest region by

revenue, rose 3%, but they fell by the same percentage in

Europe, the Middle East, and Africa (EMEA), its second largest

region by the same measure.

Manufacturing activity in the United States has recently

deteriorated, however.

"We are now seeing industrial activity being more sluggish.

It is reflecting the softer demand growth that is there in the

marketplace," CEO Sanjiv Lamba said of the U.S. market.

A gauge of U.S. manufacturing in July dropped to an

eight-month low amid a slump in new orders.

Linde's ( LIN ) quarterly adjusted earnings rose 8% to $3.85 per

share, just ahead of analysts' mean estimate of $3.78 in an LSEG

poll.