UPDATE 1-Signet Q3 losses narrow, sees debt reduction

* Q3 pretax loss $10.5 mln vs loss of $23.6 mln

* Diluted loss per share $0.08 vs loss per share $0.18

* Expects FY net debt reduction of $300-$350 mln

(Adds detail, shares)

LONDON, Nov 24 (Reuters) - Anglo-American jewellery retailer Signet Jewelers (SIG.N) (SIG.L) on Tuesday posted narrower third quarter losses as better margins and cost reductions more than offset weaker underlying sales.

The firm also said it expected to achieve a reduction in net debt of $300 to $350 million in its year to end-Jan. 2010 compared to its original target of $175 million to $225 million.

Signet, which trades as Kay Jewelers and Jared The Galleria of Jewelery in its main U.S. market and as H Samuel and Ernest Jones in the UK, said full-year results will, as ever, depend on the key Christmas trading period.

The group, which has nearly 2,000 stores, made a pretax loss of $10.5 million in the 13 weeks to Oct. 31.

That compares with a loss of $23.6 million pounds in the same period last year.

Diluted loss per share was $0.08 versus a loss of $0.18.

Third quarter sales, released Nov. 5, fell 2.5 percent to $613.5 million, with sales at stores open more than a year down 1.9 percent. [ID:nL5383123]

Shares in Signet, which are listed in New York and London, have nearly trebled over the last year on recovery hopes.

They were down 2 percent at 1,578 pence at 1248 GMT, valuing the business at 1.36 billion pounds ($2.25 billion).

(Reporting by James Davey, editing by Ben Deighton) ((james.davey@thomsonreuters.com; +44 20 7542 7674; Reuters Messaging: james.davey.thomsonreuters.com@reuters.net)) ($1=.6045 Pound)