UK's largest retailer Tesco has announced first-half pre-tax profits of £1.6bn, up 12.5 per cent against the profits for the corresponding period last year.

While sales growth in Britain remained "modest" - given the rising food price inflation - the Chestnut-based supermarket giant made a 9.1 per cent gain in first-half earnings from rising sales in the Asian market. The Asian operations, the retailer claimed, were "emerging strongly" from the financial crisis and showed a 30 per cent rise in profit.

Tesco is confident that its Fresh & Easy unit - which reported a £95m loss -- will become profitable as it doubles openings from one a week to two in the next 12 months, the retailer said.

The retailer's international stores which have been open at least a year reported a 4.1 per cent increase in sales in the second quarter, after being unchanged in the first quarter.

Overall, sales increased by 8.3 per cent to £32.9bn.

Company chief executive Sir Terry Leahy, who will be retiring in March, said Tesco was experiencing "the tailwinds of recovery."