UPDATE 2-Weak commissions eat into Investment Technology's Q3

* Q3 EPS $0.40 vs est $0.42

* Commissions and fees down 19 pct

* Shares down as much as 8 pct (Changes headline, recasts, adds details about Q3, adds share movement)

Oct 29 (Reuters) - U.S. agency broker Investment Technology Group Inc (ITG.N) reported quarterly profit below analysts' expectations, hurt by a 19 percent fall in commissions and fees revenue, sending its shares down 8 percent.

Net income for the third quarter was $17.5 million, or 40 cents a share, compared with $27.2 million, or 62 cents a share, in the year-ago period.

Analysts expected the company to earn 42 cents a share, according to Thomson Reuters I/B/E/S.

"The third quarter saw mutual fund flows directed largely towards international funds and index funds, with flows to our core active domestic clients turning negative in August," Chief Executive Bob Gasser said in a statement.

Total revenue for the quarter dropped 16 percent to $158.4 million, falling short of analysts' view of $160.6 million.

Commissions and fees revenue -- the largest contributor to total revenue -- fell to $132.1 million from $162.1 million a year ago. Non-U.S. revenue fell $3.40 million to $43.8 million in the quarter.

Revenue from Canada was pressured by declining market volumes and a rapidly changing market structure, Gasser said.

Shares of the New York-based company were trading down 6 percent at $22.43 in morning trade on the New York Stock Exchange. (Reporting by Sweta Singh in Bangalore; Editing by Aradhana Aravindan)