BUZZ-BHP Billiton: cuts costs, increases divi

** BHP Billiton (NYSE: BBL - news) up 3.7 pct, top FTSE 100 riser & back within grasp of 3-mth highs on consensus beating H1 profits, capex cuts, & 5 pct divi hike to $0.62 - also slightly ahead of mkt forecasts

** Better than expected results in iron ore, co's biggest earner, & in aluminium, manganese & nickel businesses co plans to hand to shareholders in a new co called South32

** Co again cut its targets for capital spending & says it will reap savings of $4 bln in the three years to 2017

** Says will stick to its policy of not cutting divis

** Jefferies says co's FCF exceeds its expectations, & 5 pct divi increase fully covered by FCF; broker would wait to buy BHP shares at a lower level given near-term risks to sector

** Co could not match rival Rio Tinto (Xetra: 855018 - news) 's recent $2 bln share buyback as its petroleum arm has been battered by a 50 pct fall in oil prices since June

** BHP's shares down some 20 pct over last 6 mths, vs 7 pct drop from Rio (RM (LSE: RM.L - news) : tricia.wright1.thomsonreuters.com@reuters.net)