UPDATE 1-Indian exchange operator delays Bahrain bourse start

* Exchange delays start from Q1 until October

* Cites sluggish market sentiment

(Adds reason for delay, executive comments)

MANAMA, April 13 (Reuters) - The Bahrain Financial Exchange (BFX), owned by Indian exchange operator Financial Technologies Ltd (FITE.BO), will delay its launch date until October due to sluggish market sentiment, it said on Tuesday.

BFX, which will offer trading in both conventional and Islamic products in equities, derivatives, commodities and currencies, had earlier said it planned to start operations during the first quarter of this year.

"We are ready to go live any time now but we are a market-oriented exchange," Arshad Khan, managing director and chief executive of BFX, told Reuters.

"The sentiment still needs to become a little bit better ... the first months of any new exchange are crucial," he said.

Khan said the exchange would also like to avoid launching operations before the summer lull in the Gulf Arab region, when business activities are subdued, and the Muslim fasting month of Ramadan this year ends in early September.

Gulf Arab capital markets had just started to slowly recover alongside global markets last year when the debt problems of the region's tourism and business hub Dubai hit regional equity and debt markets in November.

BFX will compete with the Bahrain Stock Exchange and other bourses in the region such as Nasdaq Dubai NDAQ.DI.

It has also signed an agreement with Bursa Malaysia to study a common platform on which Islamic finance products such as commodity murabaha can be traded. (Reporting by Frederik Richter; Editing by Dinesh Nair, Greg Mahlich)