UK's Rathbone Bros gets asset boost from Deutsche Bank deal

* Funds under management up 8.6 pct to 23.9 bln stg

* Tilney deal adds 617 mln stg to FuM

* To pay interim dividend of 19 pence, up 5.6 pct

* Agrees to settle legal case, faces 15 mln stg hit

* Shares (Frankfurt: DI6.F - news) up 1.2 pct, outperform midcap index (Combines separate stories, adds detail from both statements, analyst comment, share reaction)

By Nishant Kumar and Simon Jessop

LONDON, July 24 (Reuters) - UK wealth manager Rathbone Brothers Plc said its funds under management (FuM) rose in the first half of the year, boosted by a recent acquisition and strong growth in its unit trust, a form of mutual fund, business.

An 8.6 percent rise in FuM to 23.9 billion pounds ($40.7 billion) was boosted by 1.2 billion in net new money, nearly half of which came from a deal to buy assets from Deutsche Bank (Xetra: 514000 - news) earlier in the year - part of a trend of industry consolidation likely to continue in coming months.

Funds in the company's unit trusts performed strongly in the period, adding 338 million pounds in net inflows to take total assets to 2.2 billion pounds, with strong growth seen in its income, global opportunities and ethical bond funds.

Rathbone also said it planned to pay a 19 pence per share interim dividend for 2014, up 5.6 percent on 2013.

"The impact of recent acquisitions is expected to have a positive effect on earnings in 2015," said Rathbone Chief Executive Philip Howell.

By 0803 GMT, the stock was trading up 1.2 percent at 1,989 pence in a 0.2 percent weaker FTSE midcap index.

The group in April announced the acquisitions of Jupiter Fund Management's private client and charity investment business, and the London-based private client wealth business of Deutsche Bank-owned Tilney Asset Management.

The Tilney acquisition had added 617 million pounds to Rathbone's funds under management, the company said, adding the acquisition of the Jupiter unit was expected to complete at the end of the third quarter.

In a separate statement, Rathbone said it had reached a conditional agreement in a legal case involving an ex-employee of an old subsidiary, among other parties, that will involve it paying 15 million pounds.

The employee, together with three other parties, was subject to a claim of negligent management of a high-value Jersey trust, a spokesman for Rathbone said in an email to Reuters.

Rathbone has not been a direct party to these legal proceedings but was potentially liable by virtue of its indemnity arrangements with the employee. The claim was made by the family of the trustee, he added.

It expects to book the settlement as an exceptional cost in its full-year results, once the agreement has been confirmed in the courts.

"The settlement of the legal proceedings removes uncertainty and leaves Rathbones well capitalised," Canaccord Genuity (Other OTC: CCORF - news) analysts said in a report to clients. The broker has a "buy" rating on the stock with a 2,160p price target. ($1 = 0.5874 British Pounds) (Editing by David Holmes)