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Barclays takes extra 750 mln stg FX provision as profits rise 12 pct

(Adds detail, comment from chief executive)

By Steve Slater and Matt Scuffham

LONDON, March 3 (Reuters) - Barclays has set aside an extra 750 million pounds for potential fines arising from allegations of manipulation in the foreign exchange market as the British bank's annual profits rose a higher-than-expected 12 percent thanks to a sharp cut in costs.

Barclays said on Tuesday it made a 2014 adjusted pretax profit of 5.5 billion pounds, up from a restated 4.9 billion in 2013 and above the average analyst forecast of 5.3 billion pounds.

The adjusted figure does not include the additional provisions for litigation which rose 250 percent over the year to 1.7 billion pounds. Separately, Barclays set aside an extra 200 million pounds in the fourth quarter to compensate UK customers who were mis-sold insurance products.

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Barclays pulled out of settling allegations its traders tried to rig foreign exchange benchmarks in a deal between U.S. and UK authorities and six rival banks in November because it had not reached a deal with New York's regulator. Chief Executive Antony Jenkins signalled on Tuesday a resolution may come this year.

"Resolving these issues is an important part of our plan for Barclays and, although it may be difficult, I expect that we will make significant progress in this area in 2015," Jenkins said.

"I regard the behaviour at the centre of these investigations as wholly incompatible with our values, and I share the frustration of colleagues and shareholders that matters like these continue to cast a shadow over our business."

Jenkins, who has pledged to overhaul Barclays' culture and reduce its reliance on investment banking, took an annual bonus of 1.1 million pounds and also a role-based allowance of close to 1 million pounds for 2014, the first time he has accepted a bonus since he was appointed CEO in 2012. He was paid 5.5 million pounds in total, up from 1.6 million in 2013.

Pretax profits at the investment bank dropped by a third due to weak trading income but the bank said it had a good start to 2015.

(Writing by Carmel Crimmins, Editing by Sinead Cruise)