UK stocks retreat from 2-month highs, WPP and TalkTalk fall

* TalkTalk shares fall further, WPP (LSE: WPP.L - news) down

* Bid hopes lift Aberdeen AM; company denies seeking buyer

* FTSE still 10 pct below April (LSE: 0N69.L - news) record high

By Sudip Kar-Gupta

LONDON, Oct (HKSE: 3366-OL.HK - news) 26 (Reuters) - Britain's top equity index slipped off two-month highs on Monday, weighed down by a fall in advertising group WPP while TalkTalk's losses worsened in the wake of a cyber attack on the company.

The blue-chip FTSE 100 index was down 0.3 percent at 6,426.75 points by 1126 GMT, easing back after rising 1.1 percent on Friday to its highest level in two months.

Shares (Berlin: DI6.BE - news) in WPP fell 2.5 percent, the top decliner in the FTSE 100 index. WPP reported that its sales growth had accelerated in the third quarter, but nevertheless some traders said the numbers were not strong enough to justify a further rally in its stock, which had risen nearly 10 percent over the last month.

"WPP numbers looked OK, just below expectations of 3.4 percent on a like for like basis but we shouldn't also ignore the fact that the comparatives were quite favourable also, so naturally there is a bit of disappointment from these numbers," said XTB Ltd director Joshua Raymond.

TalkTalk, which is in the FTSE 250 mid-cap index rather than the blue-chip FTSE 100, extended the previous session's sharp losses and was down more than 9 percent, as it grappled with the effects of a cyber attack on the company, first revealed on Friday.

However, David Battersby, investment manager at Redmayne-Bentley, said he was looking to potentially buy Talk Talk shares, adding that in his opinion the market had overreacted on the stock on the downside.

He did not see a steep reduction in its customer base and said that recent price declines, alongwith its dividend yield of around 6 percent, had made the stock quite attractive.

On the positive side, Aberdeen Asset Management (Other OTC: ABDNF - news) rose 3.6 percent, the top gainer in the FTSE 100 index. The company denied press speculation it is looking for a buyer, but an earlier Financial Times report that it was courting suitors was enough to stoke bid hopes and push up its shares.

The FTSE 100 is down around 2 percent since the start of 2015 and some 10 percent below a record high of 7,122.74 points reached in April. (Additional reporting by Atul Prakash; Editing by Toby Chopra)