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 stocks dragged Britain's top share index lower on Wednesday as persistent concerns over growth and valuations kept the market tethered in its recent range.

By 1055 GMT, London's blue chip index

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

The FTSE 100 has traded in a 170-point range since mid-September when the U.S. Federal Reserve joined the European Central Bank in providing a backstop for the market by promising measures to tackle the economic slowdown.

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

kicked off in the U.S overnight by lowering its global aluminium consumption outlook for 2012, although it beat watered-down expectations in the quarter.

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


were flat to lower, while integrated oils were out of favour with investors on earnings worries.

Overnight, U.S. peer Chevron Corp

warned that third-quarter profits would be "substantially lower" than the previous quarter.

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


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

to state oil group Rosneft .

The earnings outlook is precarious with energy companies in Europe predicted to miss third-quarter expectations by around 0.4 percent, according to Thomson Reuters Starmine data.

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

with a "sell" rating.

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

Kingfisher , Tesco , Wolseley and WPP Group

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 Financial Services Authority was relaxing capital and liquidity rules in a effort 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 the regulator, that's breathing space for these banks, which in the short term is good for the shares. Longer term I stay very cautious," said Chirantan Barua, senior analyst at Bernstein Research.

Man Group

rose 1.9 percent, but was off session highs, amid newspaper speculation that a U.S. bidder will soon come calling for the fund manager, with talk that 9.35 percent shareholder Blackrock and others could be lining up a 140 pence a share cash bid.

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

"These press reports have persisted for years. We do not see the logic of acquiring a company whose funds, in our opinion, are underperforming key benchmarks and are experiencing net outflows," it said.

(Editing by Hugh Lawson) ((

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