UPDATE 2-M&R says stronger rand to hit foreign earnings

* Stronger rand to hit foreign earnings

* Order book stable at 40 billion rand

* Shares down 4.2 percent (Adds detail, shares)

By Gugulakhe Lourie

JOHANNESBURG, Oct 21 (Reuters) - South African construction group Murray & Roberts (MURJ.J) said rand strength would hit foreign earnings, while performance issues in its home market and at a unit in southern Africa may limit operating results.

Shares in M&R, Africa's biggest construction group, shares were down 4.2 percent at 57.00 rand at 1240 GMT on Wednesday.

"The market is a bit disappointed and it's on a weak day as well. It's exactly not helping the momentum," Investec Securities trader Roy Lamb said. "(The market) was expecting a little bit of positive news. I see they've cut one of their projects in the Democratic Republic of Congo."

M&R said the recovery in commodity prices had brought some stability to its international markets but the continued strength of the rand would have a negative impact on the translation of earnings from Australian unit Clough, businesses in the Middle East and Cementation operations. The company, involved in building Africa's first rapid rail link in South Africa, said project cancellations and delays were expected to hit the performance of its Engineering cluster in southern Africa in the short term.

M&R said a project in the DRC has been suspended by government. It said access to the site for mechanical erection at Medupi Power Station in South Africa has been delayed, without providing reasons.

The company also said structural steel fabrication start-up and performance at Genrec was severely disrupted by significant design changes and information delays.

"The possible impact of these issues on prospects for the half-year to Dec. 31 and full year to June 2010 is currently being assessed," the company said.

Despite being hit by the effects of the global downturn, M&R's order book remained stable at 40 billion rand ($5.4 billion) at Sept. 30. The company said its project opportunity pipeline rose to 80 billion rand, based on 42 billion rand of new opportunities of in the third quarter.

M&R, involved in building stadiums for the 2010 soccer World Cup in South Africa, defined project pipeline opportunity as the sum of those project opportunities that have passed through an initial filter system and against which tender investment has or will be committed. (Reporting by Gugulakhe Lourie; Editing by Dan Lalor) ($1 = 7.398 rand)