Britain's FTSE falls as growth woes cap momentum
* FTSE 100 down 0.4 percent
* Burberry heightens earnings concerns
* ICAP holds near multi year lows after update
* RBS gains as LLoyds get downgrade from Liberum
By David Brett
LONDON, July 11 (Reuters) - Britain's top share index fell early on Wednesday, paring the previous session's gains as investors worried about waning global economic growth and company earnings.
By 0750 GMT, London's blue chip index was down 24.91 points, or 0.4 percent, at 5,639.16 points in light volumes, having added 0.7 percent on Tuesday as investors bought on the dips after two consecutive trading days of losses.
The fall tracked overnight losses for Wall Street, which has been in bearish territory since a disappointing set of U.S. jobs figures last Friday. News from the euro zone's debt crisis and global growth engine China has also done little to lighten the mood.
A sales warning from engine maker Cummins Inc was the latest worrying signal from the U.S. corporate sector overnight, on top of weak forecasts from chipmakers Applied Materials Inc and Advanced Micro Devices.
"There is an earnings per share risk at the moment and it will continue because there is just too much uncertainty going on," Edo Brasecke, strategist at Investec, said.
"The risk at the moment is that although the probability might be small if something does go wrong in Europe it is going to be massive so you can not really price it in to anything, so in the short-to-medium term the main players (portfolio managers) are just going to sit on their hands, which will increase volatility," he said.
UK-listed British luxury brand Burberry was the major local casualty on Wednesday, down 5 percent, after the company reported a slowdown in quarterly sales growth as trading conditions worsened in its markets.
"What is more worrying is the slowdown at Burberry is being felt across the luxury brands industry, with the market further scaling back estimates for peers LVMH and Luxottica," Ishaq Siddiqi, a market strategist, at ETX Capital, says.
Shares in Burberry, Luxottica and luxury goods peer LVMH were trading at between 18.1 and 19.6 times the company's expected earnings for the next 12 months - a premium to the broader market at 17.1 - implying a 9.8-10.4 percent compound annual growth rate in earnings per share, according to Starmine data.
ICAP was hovering near more than 2 year lows as the world's largest derivatives broker brought forward plans to slash 50 million pounds ($77.5 million) of annual costs to counter a trading slowdown that forced the brokerage's revenue down 9 per cent in the last quarter.
Johnson Matthey fell 2.4 percent as UBS cut its earning forecasts on the world's largest supplier of catalytic converters by 4 percent, due to lower in-house metals price forecasts, in a preview of forthcoming results.
The FTSE 100 looks to be range bound for the short term between 5,600 and 5,700.
The latter level is technically significant as it is the 61.8 retracement of a fall which began in March - when euro sovereign debt worries resurfaced - and bottomed out at the beginning of June, as expectations of central bank intervention grew.
Coordinated intervention by European and Chinese policymakers may have come too late to help corporate earnings in the current quarter.
The biggest fallers on the FTSE 100 were the miners and the banks as investors appetite for risk faded for the time being.
Lloyds Banking Group was among the top fallers in the banking sector, down 0.6 percent as Liberum Capital double downgraded the UK-lender to "sell" from "buy" on concerns over the bank's potential exposure to LIBOR litigation and the worsening macro environment.
Lloyds has outperformed Barclays, which has lost its chairman and chief executive after the bank became engulfed by the LIBOR scandal, by around 25 percent since June 1, and is faring about 15 percent better than Royal Bank of Scotland in the same period.
With Lloyds lower investors switched into RBS, which was up 1.1 percent early on.
In other financials insurer Aviva rose 1.1 percent with traders citing an upgrade from Morgan Stanley as helping lift sentiment in the stock. (Written by David Brett; editing by Patrick Graham)
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