Commodities drag FTSE lower on growth worries

* FTSE 100 down 0.4 percent

* US metals firm Alcoa starts earnings on downbeat note

* Smith & Nephew falls on earnings worries

* Man Group rises on renewed bid speculation

By David Brett

LONDON, Oct 10 (Reuters) - Weakness in commodity stocksdragged Britain's top share index lower on Wednesday aspersistent concerns over growth and valuations kept the markettethered in its recent range.

By 1055 GMT, London's blue chip index

slipped 21.28points or 0.4 percent to 5,788.97, as an expected weaker starton Wall Street also kept bulls at bay.

The FTSE 100 has traded in a 170-point range sincemid-September when the U.S. Federal Reserve joined the EuropeanCentral Bank in providing a backstop for the market by promisingmeasures to tackle the economic slowdown.

Those measures look to have come too late for thethird-quarter earnings season, which Aluminium maker Alcoa

kicked off in the U.S overnight by lowering its globalaluminium consumption outlook for 2012, although it beatwatered-down expectations in the quarter.

"Commodities are bearing the brunt of the falls on globalgrowth worries, although there is little in the way of freshnews for investors to chew on," a London-based trader said.


were flat to lower, while integratedoilswere out of favour with investors on earningsworries.

Overnight, U.S. peer Chevron Corp

warned thatthird-quarter profits would be "substantially lower" than theprevious quarter.

Companies in the sector are still deleveraging, potentiallyat the expense of future earnings growth.


was down 0.7 percent as well, despite a FinancialTimes report that Russian President Vladimir Putin backs thecompany's plan to sell its 50 percent stake in TNK-BP

to state oil group Rosneft.

The earnings outlook is precarious with energy companies inEurope predicted to miss third-quarter expectations by around0.4 percent, according to Thomson Reuters Starmine data.

Risks to forecasts were among a number of reasons SocieteGenerale restarted coverage on the orthopaedics firm Smith &Nephew

with a "sell" rating.

Soc Gen also cited an unappealing valuation and an M&Aoverhang as Smith & Nephew's shares, which also tradedex-dividend, fell 2.6 percent.

Kingfisher, Tesco, Wolseleyand WPPGroup

also traded without their dividend entitlements.


More UK-focused banks clung onto gains. Lloyds Banking Group

was up 3.2 percent and Royal Bank of Scotland

added 1.2 percent after an FT report that Britain's FinancialServices Authority was relaxing capital and liquidity rules in aeffort to stimulate the economy.

"(RBS and Lloyds) are the two banks which are most exposed,along with Barclays. If they get a bit of leeway from theregulator, that's breathing space for these banks, which in theshort term is good for the shares. Longer term I stay verycautious," said Chirantan Barua, senior analyst at BernsteinResearch.

Man Group

rose 1.9 percent, but was off sessionhighs, amid newspaper speculation that a U.S. bidder will sooncome calling for the fund manager, with talk that 9.35 percentshareholder Blackrock and others could be lining up a 140 pencea share cash bid.

"Our opinion regarding a takeover of Man Group remainsunchanged despite the press report: it is possible but remainsunlikely," RBC said in a note.

"These press reports have persisted for years. We do not seethe logic of acquiring a company whose funds, inour opinion, are underperforming key benchmarks and areexperiencing net outflows," it said.

(Editing by Hugh Lawson)((

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