UPDATE 1-Grafton turnover stabilising as UK housing improves

* Turnover down 28 percent in 10 months to end-October

* October revenue in line with average of prior six months

* Shares down 0.9 percent

(Adds detail, shares)

DUBLIN, Nov 10 (Reuters) - Irish building supplies group Grafton (GRF_u.I) said turnover was continuing to stabilise as the British housing sector showed signs of improvement.

While turnover was down 28 percent to 1.69 billion euros ($2.53 billion) in the 10 months to end-October, revenue of 174 million in October was in line with the average for the prior six months, Grafton said on Tuesday.

"The stabilisation of group turnover experienced since April has been maintained in September and October," it said, adding: "In line with the group's trading updates issued earlier this year, the group continues to experience very challenging trading conditions".

The company said leading housing indicators in Britain continued to improve and increases in activity should be reflected in improved British merchanting business during 2010.

Grafton shares were down 0.9 percent to 3.35 euros by 1027 GMT.