Earnings concerns weigh on UK shares

* FTSE 100 index sheds 0.3 percent

* Worries build ahead of UK Q3 earnings season

* Shire heads weak drugmakers

* Broker comment positive for mining stocks

By Jon Hopkins

LONDON, Oct 22 (Reuters) - Britain's top share index lost

ground on Monday, extending declines on concerns about upcoming

third quarter earnings.

Drugmakers dipped, with Shire down 1.8 percent and

AstraZeneca off 0.5 percent. The firms kick off the

heavyweight sector's results season on Thursday.

According to Thomson Reuters Starmine data, of the 8 percent

of European companies that have reported results so far, nearly

half have missed forecasts.

TR Starmine analysts have estimated year-on-year

third-quarter earnings growth at 7.6 percent in Europe, while

the average for companies that have already reported is a 4.2

percent drop.

At the close, the FTSE 100 was down 17.82 points, or

0.3 percent, at 5,882.91 points, having shed 0.4 percent on

Friday to snap a four-session winning streak.

UK blue chips tracked weakness in their U.S. peers, with the

Dow Jones off 0.3 percent by London's close, having

dropped sharply on Friday, also pressured by earnings concerns.

Among the U.S. fallers, mining company Freeport-McMoRan

lost 0.9 percent after its third-quarter profit fell

sharply, missing Wall Street estimates.

UK-listed miners, however, featured on the FTSE

leaderboard, steadying after falls on Friday, with traders

citing support from positive European strategy comments from

Morgan Stanley.

The bank's strategists switched their preference to miners

from chemicals within European materials, which is their

preferred cyclical sector, citing relative valuations and signs

of an improving economic outlook in China.

"I think the mining sector is not that widely owned,

particularly amongst the UK long-only community. Miners have

been consensus underweight for some time, and therefore people

at a minimum will start closing their underweight positions,

which will put upward pressure on share prices", said Graham

Secker, equity strategist at Morgan Stanley.

Gold miner Randgold Resources

gainer, up 2.7 percent on a firmer gold price and

following a hike in target price by Societe Generale to 9,000

pence from 7,600.

Precious metals firm Johnson Matthey missed out on

the sector gains, falling 2.1 percent having spiked by a similar

amount in the previous session on speculative interest.

Andrew Gibson, Head of Research at Galvan said the share

represented a buying opportunity, citing technical factors.

(Reporting By Francesco Canepa; Editing by John Stonestreet)

Source: http://news.yahoo.com/earnings-concerns-weigh-uk-shares-155601039--business.html

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