UPDATE 1-South West Water owner Pennon's FY profit jumps on waste recycling push (May 30)

(Corrects 7th paragraph to say high volume of leaks was across the industry)

May 30 (Reuters) - Pennon Group reported an 8.3% jump in full-year earnings on Thursday, as strong performance by its waste recycling unit helped the British water utility and waste management company offset higher costs at its South West Water business.

The FTSE 250-listed company, which along with other water utilities has been rattled by plans set out by the Labour Party for a return to state ownership, added re-nationalisation to its risk factors without giving any further details.

Pennon's waste recycling business Viridor, that manages seven million tonnes of recyclates and resources each year, benefited from a rise in awareness about the need to limit dumping of plastics as well as government efforts to encourage waste recycling.

The unit's core earnings surged 19.1% for the 12 months ended March 31, in turn pushing up overall underlying pretax profit to 280.2 million pounds ($354.0 million) from 258.8 million pounds reported a year earlier.

"There was a partial recovery of global recycling markets in 2018/19 following import restrictions by China in the prior year, and we see ongoing value in high quality recyclate," the company said in a statement.

Pennon said it would invest 65 million pounds in a new plastics recycling facility, after spending more than 1.2 billion pounds so far to develop a network of energy recovery facilities across the UK. Ten such facilities are currently operational.

At its South West Water business, however, the company was hit by extreme weather conditions in Britain last year that led to a high volume of leaks and supply interruptions across the industry. Pennon said these interruptions were still at their lowest-ever levels.

The segment's revenue and core earnings rose, partly helped by incentives paid by water services regulator Ofwat for meeting or exceeding targets set under multi-year business plans, such as project completions and standards of customer service.

($1 = 0.7915 pounds) (Reporting by Muvija M in Bengaluru; Editing by Rashmi Aich)