WPP's chief is among the highest paid in Britain

WPP said conditions in the North American market, which provides almost 44% of the group's revenue, offered a glimmer of hope after stabilising and even showing signs of improvement over the past six months.

However, it said the UK market remains depressed.

The world's third largest advertising firm, whose clients include Ford, IBM, Unilever and Pfizer, said profits for the first six months of 2003 were 5% down on the year at �202.9m ($324.6m).

The figure was ahead of City forecasts, with most analysts expecting profits of about �198m.

Chief executive Sir Martin Sorrell, who famously predicted over a year ago that the advertising downturn would be "bath-shaped", said:

"Certainly, it seems as though we are starting to climb out of the bath."

Spending boost

WPP is pinning it hopes of a recovery on the US, where it suggested preparations for the 2005 presidential elections should provide a much-needed boost to sales.

"The growth in US spending is currently greater than at any other time since the Vietnam war in 1967," WPP said.

Advertising spending ahead of the election should help WPP and its peers, as should massive marketing budgets linked with the Olympic Games in Athens and the European football championship in Portugal, chief executive Sir Martin Sorrell told BBC World Business Report.

It added that the Athens Olympic Games and the Portuguese European Football Championship "bode well for the prospects for 2004".

The advertising industry has been squeezed by companies cutting their expenditure in response to the economic downturn.