FTSE retreats from 10-wk high, Petrofac slumps after warning

* Blue-chip FTSE 100 index falls 0.3 percent

* Petrofac (Frankfurt: A0HF9Y - news) plummets 15.6 pct after profit warning

* FTSE 100 less than 2 pct away from record high

By Tricia Wright

LONDON, May 9 (Reuters) - Britain's top share index slipped from a 10-week high on Friday, with energy services group Petrofac slumping after a profit warning and aero-engines maker Rolls-Royce hurt by broker downgrades.

Tensions in Ukraine also prompted investors to take some money off the table after recent gains.

Petrofac fell 15.6 percent after warning its 2014 net profit would fall by as much as 11 percent to between $580 million and $600 million due to a poor performance from its Integrated Energy Services division.

Analysts highlighted that weak results are being punished more than they would have been in the past, in the wake of a powerful rally in 2013 in anticipation of encouraging earnings.

But while this has left valuations looking full, a recovering U.S. economy should help pick up the slack, with a drop in initial jobless claims on Thursday the latest sign that the labour market there was improving.

The FTSE 100 index trades on a 12-month forward price/earnings ratio of around 13 times, against its 10-year average of about 12 times, Thomson Reuters Datastream shows.

"Individual share prices are likely to react very poorly when you have a profits warning like (with) Petrofac... but the overall market is likely to be driven higher by improving economic momentum out of the U.S," Gerard Lane, equity strategist at Shore Capital, said.

Tensions in Ukraine have been prompting investors to stay cautious. The situation remained fragile with pro-Moscow separatists in the east of the country ignoring a call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring they would go ahead on Sunday with a vote that could lead to war.

Rolls-Royce fell 1.5 percent, pressured by a downgrade by Barclays (LSE: BARC.L - news) to "underweight" from "overweight" and a cut in its target price for the stock to 930 pence from 1,225 pence. The downgrade followed a reduction in its target price by JPMorgan to 1,300p from 1,350p on Thursday.

"Slow growth over the next two years, high exposure to a single yet-to-enter service aircraft, significant cash and margin headwinds, accounting concerns, and questions over capital allocation lead us to our 'underweight' rating," Barclays said in a note.

Petrofac and Rolls-Royce were among the biggest decliners on the blue-chip FTSE 100 index, which fell 22.85 points, or 0.3 percent, to 6,816.40 points by 1035 GMT after rising to a high of 6,840.37 on Thursday, its highest since late February.

The index was just short of 2 percent away from its record high set in December 1999 and charts suggested it had the potential to set new highs in the near future.

"From a longer-term perspective, the FTSE 100 index is reaching a 15-year resistance from the 1999 and 2007 peaks," Dominic Hawker, technical analyst at Messels, said.

However, a "breadth indicator" that measures the percentage of stocks trading above their 200-day average was not overbought and suggested the FTSE 100 could still gain upward momentum, Hawker said. "I still remain positive that the market can break out." (Additional reporting by Atul Prakash; editing by Susan Thomas)