UPDATE 1-Brighthouse Financial makes a dull debut

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Aug 7 (Reuters) - Shares of Brighthouse Financial Inc , the U.S. retail insurer spun off from MetLife Inc, fell as much as 6 percent in market debut on Monday as it goes solo in an industry struggling with low interest rates.

Brighthouse's shares touched a low of $60.58 in early trading, giving it a market capitalization of $7.26 billion.

At least five brokerages started coverage of the stock, with the majority having a "market perform" or equivalent rating.

Wells Fargo Securities analyst Sean Dargan said while a stand-alone Brighthouse offers potential upside if markets and interest rates move upward in tandem, he did not view the "risk-reward" favorably at this time.

"If interest rates fall from here or equity markets retrace, we would expect BHF to be a heavily shorted name," said Dargan, who began coverage of the stock with a "market perform" rating and a $71 price target.

Low interest rates have made it difficult for insurers to earn more on their investments as much of their portfolio is made up of low-yielding bonds.

"If you like the theory that interest rates may rise over time strong equity markets might be a tail wave for Brighthouse," Metlife Chief Executive Steven Kandarian said in a CNBC interview.

The completion of the spinoff, a plan unveiled last year, ends MetLife's reign as the largest U.S. life insurer by assets.

That title will now be held by Newark, New Jersey-based Prudential Financial Inc, which had $797.4 billion in assets as of March 31, according to a filing and data from the American Council of Life Insurers.

Following the spinoff, MetLife will be left with core businesses centered mainly around group life-insurance and other employee benefits, asset management and a clutch of international operations.

"Our goal for post-separation MetLife is to be a company that can perform well in a variety of macroeconomic environments," Kandarian said in April.

A slimmed-down MetLife is likely to help the company in its legal battle against the U.S. Financial Stability Oversight Council naming it "systemically important" in 2014.

The designation - which triggers stricter regulatory oversight as the insurer has the potential to devastate the financial system if it fails - was struck down by a U.S. judge last year.

Brighthouse holds $223 billion of total assets and about 2.8 million insurance policies and annuity contracts as of March 31, according to a filing. (Reporting By Aparajita Saxena in Bengaluru and Suzanne Barlyn in New York; Editing by Anil D'Silva)