UPDATE 1-JP Morgan removes MF Global from focus list

(Recasts; adds details, analyst's comments)

July 1 (Reuters) - J.P. Morgan removed futures and options broker MF Global Ltd (MF.N) from its focus list but kept its "overweight" rating on the stock.

"Our rating and estimates were suspended on June 17. With our rating now unrestricted, we see our focus list thesis as wrong," analyst Kenneth Worthington said in a note to clients.

"A business that was stabilizing post risk management issues has again been destabilized by earnings problems and lack of investor confidence evidenced by the onerous terms MF had to pay for its capital refinancing," Worthington said.

Last month, MF Global received financing worth $450 million from a bank syndicate.

The analyst also said MF Global was losing another round of high-quality customers and lack of investor confidence might drive away some of the corporate customers to its peers.

But, reputable hires should ease concerns if conditions get worse and the presence of well-known and respected officers hired from outside the firm should add to management credibility, he added.

"We see catalysts in MF's ability to get its ratings taken off credit watch and eventually getting any lost customers to return and start growing the business," Worthington said.

Shares of MF Global closed at $6.31 Monday on the New York Stock Exchange. (Reporting by Adheesha Sarkar in Bangalore; Editing by Amitha Rajan)