UPDATE 1-Dexia shares down 14 pct after Moody's warning

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BRUSSELS, July 22 (Reuters) - Shares in Belgian-French financial services group Dexia (DEXI.BR)DEXI.PA fell 14 percent on Tuesday after Moody's Investors Service said it might cut its top rating for Dexia's bond insurance division Financial Security Assurance.

"We take note of the concerns Moody's has expressed, and we will work closely with them to reestablish our Aaa-stable claims-paying ratings," Robert Cochran, chairman and chief executive of FSA, said.

Dexia shares were trading at 8.2 euros at 0750 GMT down from 9.55 euros at the end of the last trading session.

Most bond insurers have been downgraded due to losses they are expected to take from insuring risky residential mortgage backed debt.

FSA avoided losses from mortgages packaged in collateralized debt obligations, which tripped up many of its competitors.

However, it has generated losses in its insurance and asset management operations from insuring residential mortgage backed debt directly, Moody's said.

Analysts at Degroof Research said they expected FSA would be able to maintain its current Aaa rating, the highest assigned by Moody's.

"We believe that maintaining the rating might result in Dexia providing additional capital to FSA, limited to a few hundreds of millions of US dollars," they said in a research note.

"This would not have a material impact on Dexia's solvency. We reiterate our buy rating on Dexia," they added. "In its own report Moody's says that FSA is currently estimated to be only $140 million below the Aaa target level for capital adequacy."

Dexia last month said it would provide a $5 billion credit line to FSA to assure markets and rating agencies that its credit is good.

This has mitigated the financial effect of FSA's losses, "however such support may not be unconditional or sufficient to entirely mitigate potential risks", Moody's said. (Reporting by Pete Harrison; editing by Sue Thomas)