UK shares down on bleak outlook and earnings reports

* FTSE 100 loses 1.2 percent

* BG, Barclays and GSK all weigh after results

* Volumes recover as U.S. markets reopen

LONDON, Oct 31 (Reuters) - UK shares fell on Wednesday,

ending the month on a down note as a string of gloomy earnings

and outlooks from firms such as Barclays and

GlaxoSmithKline weighed on sentiment.

The FTSE 100 was down 1.2 percent, or 67 points, at

5,782.70 at the close, more than shedding the previous session's

gains, led down by a forecast of no growth in production next

year from BG Group.

The oil and gas firm's stock slid 13.7 percent in heavy

volume of 16 times its 90-day average, taking 24 points off the

FTSE 100 after reporting earnings results. Although the

results came in ahead of consensus estimates, the company saw a

weaker production outlook.

"Today's production downgrade wipes out much of the

projected earnings-per-share growth for BG," Investec Securities

said in a note, as downgraded the company's rating to "Sell"

after the results, which were released a day earlier than

markets expected.

BG's results are an example of a broader trend where beating

expected earnings is not enough to satisfy the markets.

"Earnings estimates have come down 14 percent this year, so

all the earnings growth that you were supposed to be generating

in stocks this year is gone," Mike Ingram, market analyst at BGC

Partners, said.

"Many companies have forecasts which are there to be beaten,

and you expect it to be beaten... If you look at share price

reaction around the actual announcement of results, I don't

think there's any real correlation between good results and good

performance or bad results and bad performance," he said, citing

BG Group.

Several heavyweight firms who missed estimated results on

Wednesday also saw bleak outlooks in the near future. Barclays

shed 4.7 percent after its third-quarter profits fell by a fifth

due to charges for mis-selling insurance. The bank also said

that U.S. authorities had opened two new investigations against

it.

Pharmaceutical company GlaksoSmithKline lost 2.4 percent

after posting a fourth consecutive quarter in which Britain's

biggest drugmaker missed sales and earnings expectations, with

Chief Executive Andrew Witty warning that Europe would continue

to weigh on the company "in the next quarter or two".

Among the gainers by those who reported results, Standard

Life slightly missed expected sales, but still rose 2.2

percent after recording assets under management that came in

ahead estimates by Bank of America-Merrill Lynch analysts.

"In overall terms, the new business numbers look reasonable

to us given the headwinds of recession and upcoming regulatory

change," Kevin Ryan, analyst at Investec, said in a note.

Beyond earnings, Tullow Oil rose 1.5 percent after

confirming the oil group had made a discovery in its Twiga block

in Kenya.

Trading volumes recovered to around the 90-day average after

two days of suppressed activity due to the closure of U.S.

markets as a huge storm battered New York.

(Additional reporting by Francesco Canepa; editing by Ron

Askew)

Source: http://news.yahoo.com/uk-shares-down-bleak-outlook-earnings-reports-171711472--business.html

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