UPDATE 2-EU warning on Orion drug sends GTx stock tumbling

* EU agency warns of heart risk with cancer drug Fareston

* Drug's Finnish maker Orion sees minor impact on sales

* Shares in U.S. partner GTx tumble 35 percent (Adds latest shares, analyst comment, more detail on drug)

By Ben Hirschler

LONDON, Jan 22 (Reuters) - European regulators warned on Thursday that Finnish group Orion Corp's (ORNBV.HE) breast cancer drug, Fareston, should not be used in patients with heart conditions, sending shares in its U.S. partner GTx Inc (GTXI.O) 35 percent lower.

The London-based European Medicines Agency experts had recommended against giving the medicine, known generically as toremifene, to patients at risk of prolonged QT intervals or other heart problems.

The QT interval is a measure of the time between two waves in the heart's electrical cycle. Patients with prolonged QT intervals can develop dangerously irregular and fast heartbeats.

After reviewing the available data, the EU watchdog concluded the benefits of Fareston were greater than its risks, but that its use should be restricted.

Orion said it had been following the process for some time, adding the drug was not a major driver for the company.

"It's a generic product and the sales are fairly low. It's not a big issue for Orion in that sense," a spokeswoman said.

Orion shares ended down 1.4 percent at 12.63 euros, after touching a low of 12.52.

But the impact was severe on stock in GTx, which markets the drug in the United States and is also conducting further research into the medicine for prostate cancer indications.

Its shares were off 35 percent at $10.46 by 2025 GMT.

Analysts at Wachovia said the the massive drop was an over- reaction, arguing the elimination of high-risk patients would only remove an estimated 5 percent of the market opportunity in prostate cancer.

Fareston has been approved in Europe since 1996 as a treatment for hormone-dependent metastatic breast cancer. But the majority of the sales are generated in the United States and Japan, where it is marketed by Nippon Kayaku Co Ltd (4272.T). (Additional reporting by Brett Young in Helsinki; editing by Elaine Hardcastle and Andre Grenon)