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FTSE 100 sags, earnings outlook in focus

* FTSE 100 down 0.8 percent

* Cookson, Michael Page warn on profits

* Miners sag as World Bank cuts Asia growth

* BAE, EADS tie-up faces more hurdles

By David Brett

LONDON, Oct 8 (Reuters) - Britain's top share index fell early on Monday, exhibiting weakness after gains in the previous session and overnight falls in Asia, with some caution building among investors ahead of the start of the new earnings season.

By 0741 GMT, the FTSE 100

was down 48.68 points, or 0.8 percent at 5,822.34, erasing Friday's gains with concerns over the third-quarter earnings season, which begins in earnest in the United States on Tuesday, mounting after a batch of downbeat updates set the tone for the market.

"(The fall) is likely to reflect a degree of caution ahead of the looming Q3 reporting season," Ian Williams, equity strategist at Peel Hunt, said.

"There is understandable bottom-up caution from corporate managements who may still be suffering from a lack of visibility, which could just cap the near-term upside in equity indices."

Cookson Group , which makes products for the global steel industry, and recruiter Michael Page

on Monday became the latest UK firms to issue profit warnings. Cookson fell 14.4 percent while Michael Page shed 5.4 percent.

Mid-cap news retailer WH Smith

is the most shorted stock in Europe announcing earnings with 7.1 percent of its shares on loan, according to data explorers.

Promises by central banks in Europe and the United States to provide economic stimulus continue to provide a back stop for equity markets and prevents a radical retracement of a rally that began in early June.

The gains for equities in tandem with weak earnings in the previous quarter has left the FTSE 100 trading on a 12-month forward price-to-earnings of around 11.5 times - near post credit crisis highs.

But the economic backdrop remains murky with high unemployment in the world's biggest economy, the United States, while the World Bank cut growth forecasts for the East Asia and Pacific region and said there was a risk the slowdown in China could get worse and last longer than expected.

UBS analysts said in a note that while PEs are not expensive versus a long run average of over 13 times, no one believes consensus 2013 earnings per share growth of 12.5 percent.

"It seems that no one trusts the PE. We look to Q3 reporting season/outlook statements to focus the mind on something realistic for 2013," the bank said.

With the cut in forecasts from the world bank, lack of faith in valuations and Cookson's update reverberating around the market, miners

, which trade on 11 times PE, were the major fallers on London's blue chip index. Global miner BHP Billiton shed 2.0 percent.

With risk appetite among investors subdued banks

and integrated oils also retreated.

Elsewhere there was more uncertainty for BAE Systems

as the saga surrounding its proposed tie-up with French peer EADS

rumbled on after the largest shareholder in BAE issued a long list of objections to the group's proposed $45 billion merger.

(Written by David Brett)

((david.brett@thomsonreuters.com)(020 7542 8099)(Reuters Messaging: Reuters Messaging: david.brett.thomsonreuters.com@reuters.net))

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