FTSE hits 2-week low, Sports Direct slumps

* FTSE 100 index falls 1 pct, hits 2-week low

* Retailer Sport Direct falls 10.7 percent

* Associated British Foods (LSE: ABF.L - news) down 3.7 pct

By Atul Prakash

LONDON, April 8 (Reuters) - Britain's top share index hit a two-week low on Tuesday, led by Sports Direct (Frankfurt: A0MK5S - news) after its founder sold a chunk of shares in the company, and financials lost ground due to concerns about valuations and earnings.

Sports Direct was the worst-performing FTSE 100 stock in percentage terms, falling by 10.7 percent after founder Mike Ashley sold 25 million shares.

The blue-chip FTSE 100 index extended the previous session's loss of 1.1 percent and was down by another 1 percent to 6,553.80 points by 1115 GMT after touching 6,549.75, the lowest since late March.

The market also came under pressure due to a sell-off in insurance and banking shares. Investors were taking a cautious stand in the near term ahead of the earnings season and due to concerns about valuations, lingering geopolitical concerns and growth prospects.

"Expectations are clearly too high for global growth this year and I believe the markets are re-pricing risk," Michael Jarman, head of equity strategy at H2O Markets, said.

"However, I believe this is a perfect opportunity for investors to get more active. There is an armoury of cash ready to 'buy the dip'."

Financials were the worst hit, with Lloyds down 3.4 percent, Barclays (LSE: BARC.L - news) down 2.7 percent, Resolution falling 3.8 percent and Prudential (HKSE: 2378.HK - news) retreating 2.6 percent.

Insurers also slipped in knee-jerk reaction to news saying Britain's insurance industry has urged its regulator to hold a fully independent inquiry into how news of a review into the sector was released.

Shares in the sector tumbled on March 28 after the Financial Conduct Authority told a newspaper it was reviewing part of the industry, raising fears that profitability would be hit.

"The insurance sector as a whole has come under scrutiny over the course of recent weeks because of regulatory concerns. Investors are already a bit worried and this kind of news adds to uncertainty and concerns," said Peter Dixon, economist at Commerzbank (Xetra: CBK100 - news) .

Among other sharp movers, food and fashion conglomerate Associated British Foods fell 3.7 percent, with traders attributing ABF's fall to a profit warning on Tuesday by German sugar producer Suedzucker (Other OTC: SUEZF - news) .

According to Thomson Reuters StarMine data, Associated British Foods is on a price to earnings per share (P/E) ratio of 25.9 for the next 12 months - giving it a higher rating than similar P/E ratios of 12.7 for rival Tate & Lyle (LSE: TATE.L - news) and 18.3 for France's Danone (Paris: FR0000120644 - news) .

JNF Capital investment manager Ed Smyth said he believed ABF's rating was too high. "We believe ABF is simply overvalued," he said. (Additional reporting by Sudip Kar-Gupta; Editing by Mark Heinrich)