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 fellearly on Monday, exhibiting weakness after gains in the previoussession and overnight falls in Asia, with some caution buildingamong investors ahead of the start of the new earnings season.

By 0741 GMT, the FTSE 100

was down 48.68 points, or0.8 percent at 5,822.34, erasing Friday's gains with concernsover the third-quarter earnings season, which begins in earnestin the United States on Tuesday, mounting after a batch ofdownbeat updates set the tone for the market.

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

"There is understandable bottom-up caution from corporatemanagements who may still be suffering from a lack ofvisibility, which could just cap the near-term upside in equityindices."

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

on Mondaybecame the latest UK firms to issue profit warnings. Cooksonfell 14.4 percent while Michael Page shed 5.4 percent.

Mid-cap news retailer WH Smith

is the most shortedstock in Europe announcing earnings with 7.1 percent of itsshares on loan, according to data explorers.

Promises by central banks in Europe and the United States toprovide economic stimulus continue to provide a back stop forequity markets and prevents a radical retracement of a rallythat began in early June.

The gains for equities in tandem with weak earnings in theprevious quarter has left the FTSE 100 trading on a 12-monthforward price-to-earnings of around 11.5 times - near postcredit crisis highs.

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

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

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

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

, which trade on 11 times PE, werethe major fallers on London's blue chip index.Global miner BHP Billitonshed 2.0 percent.

With risk appetite among investors subdued banks

and integrated oilsalso retreated.

Elsewhere there was more uncertainty for BAE Systems

as the saga surrounding its proposed tie-up with Frenchpeer EADS

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

(Written by David Brett)

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


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