* Aims to avoid equity raising

* Shares jump as much as 34%

* To hold off on dividends

* Expects to shed 1,000 jobs

April 13 (Reuters) - Babcock on Tuesday warned of 1.7 billion pounds ($2.34 billion) in charges after a review of its business but shares in the British engineering firm jumped 30% on relief that its recovery was not expected to include a cash call.

"Through self-help actions, we aim to return Babcock to strength without the need for an equity issue," recently appointed CEO David Lockwood said.

The 150-year-old company said it would aim to raise at least 400 million pounds from divestitures over the next 12 months.

The mid-cap company, which has contracts in the aerospace, defense and civil nuclear sectors, brought in Lockwood as CEO and a new finance chief last year to navigate through the pandemic.

It said it plans to take a 40 million pound restructuring charge, mostly over the next 12 months, and expects about 1,000 of its approximately 35,000 staff to leave the group.

JP Morgan analysts in a note called Babcock's update "far more benign than many expected" and upgraded their rating on the company to "overweight" from "neutral."

The shares jumped as much as 34% in early trade and stood up 25% higher at 3 pounds by 0714 GMT, recouping some of the losses they suffered in January when Babcock began its review of the profitability of its contracts.

Babcock, whose biggest customer is Britain's Ministry of Defence, said it would not recommend a dividend for 2021 and 2022, adding that the review would lower its underlying operating profit by about 30 million pounds each year.

"We are cautious about progress in FY22 profitability as it will be a year of transition and also given the ongoing uncertainty of when COVID-19 restrictions will be lifted in our markets," Babcock said.

Excluding the impact from the review, underlying revenue for the year to March 31 was 4.69 billion pounds, down from 4.87 billion a year earlier, while underlying operating profit fell 41% to 307 million pounds.

($1 = 0.7267 pounds) (Reporting by Aby Jose Koilparambil and Muvija M in Bengaluru; Editing by Shounak Dasgupta)