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* FTSE 100 down 0.2 pct
* On track for worst week in two months
* Burberry slides for second day as brokers cut
By Helen Reid
LONDON, Nov 10 (Reuters) - British shares could not shake a downbeat mood on Friday and were set for their worst weekly drop in two months, as retail stocks continued to weigh, with Burberry and Bunzl leading losses.
Britain's FTSE 100 was down 0.2 percent by 0830 GMT, sliding for the second day alongside broad weakness in European trading. It was set for its worst weekly loss in two months.
Industrials and construction stocks piled pressure on the index, tracking a slide in these sectors across Europe. They have been among the strongest drivers of stock market gains in the past months.
Bunzl dropped 4.3 percent, the worst-performing large-cap stock, after a note from Morgan Stanley said the retail distributor's shares were not yet reflecting potential disruption from Amazon Business, the online giant's business-to-business distribution venture.
"Amazon's intention to target B2B distribution has resulted in a significant derating for Rexel (LSE: 0KBZ.L - news) , whilst Bunzl has been unaffected. However, the Bunzl offer appears more vulnerable to us," MS analysts said, recommending investors switch into the French distributor's shares.
Retailers weighed on the index for a second day after a week of downbeat results from Marks & Spencer (Frankfurt: 534418 - news) and Sainsbury (Amsterdam: SJ6.AS - news) 's confirmed investors' widespread pessimism on the sector.
A survey showed British shops suffered their worst October for sales in a decade, sending high street staple Next (EUREX: NXTJ.EX - news) down 1 percent, while Primark owner ABF fell 1.1 along with M&S.
"We have already seen this in Q3 earnings for domestically focused companies and CEO guidance for future quarters has been less optimistic."
Burberry sank for a second day, extending Thursday's sharp results-driven losses, after no fewer than five brokers cut their price target on the stock.
Bernstein analyst Mario Ortelli, cutting the stock to underperform, said: "Burberry has the potential to emerge as the next big thing but in the meantime shares will be suppressed as investors await further news regarding the hiring of a new creative director and progress in the brand transformation."
Data showing industrial output rose at its fastest pace this year in September boosted sterling, taking the large-cap index of mainly foreign-earning firms down a notch further.
Among mid-caps Ultra Electronics shares sank 6.6 percent after the defence contractor said it expected a delayed decision from the U.S. Department of Justice on its $234 million purchase of Sparton Corp.
Rival defence contractors Babcock and Cobham (Amsterdam: CH6.AS - news) also sank 0.9 to 2.1 percent, while outsourcers Capita (Taiwan OTC: T1614Y.TWO - news) and Serco dropped 2.6 percent each. (Reporting by Helen Reid; Editing by Alison Williams)