UPDATE 3-Federal Signal Q2 trails Street view, shares fall

* Q2 adj EPS $0.06 vs est $0.09

* Q2 revenue $198.7 mln vs est $203.3 mln

* Near-term expectations tempered by conditions in Europe

* Shares down 13 pct (Adds details and analyst comments)

By Fareha Khan

BANGALORE, July 30 (Reuters) - Federal Signal Corp's (FSS.N) second-quarter results missed Wall Street estimates, hurt by declining sales at its fire rescue segment, and provided a weak outlook, sending the security systems manufacturer's shares down 13 percent.

Federal Signal forecast earnings per share from continuing operations for second half between 18 cents to 23 cents on a conference call.

The company had earlier forecast 2010 earnings of 38 cents to 43 cents a share and 2011 earnings of 70 cents to 80 cents a share. [ID:nSGE63R0FW]

"The 2010 earnings guidance that was given on the call was probably one reason why the shares fell... also the company seems to be backing away from the 2011 earnings it had given earlier," Hudson Securities analyst Ned Borland told Reuters.

The company said it will not give a detailed update to its 2011 outlook until later this year.

Federal Signal said a high level of uncertainty around European public sector spending and economic conditions in the continent have tempered its near-term expectations.

Borland, who has a "buy" rating on the stock, said the uncertainty regarding the European market and the lower-than-expected results weighed heavily on the shares.

Europe accounted for 40 percent of its sales in 2009. [ID:nN04173019]

The results missed estimates due to weak figures at its Fire Rescue the Federal Signal Technologies (FSTech) units, Barrington Research analyst Walter Liptak said.

Sales at the fire rescue unit fell 29 percent to $29.6 million.

The company also recognized a $3.7 million restructuring charge in the second quarter, partly for establishing FSTech.

Budgets are tight for most state and municipal safety organisations, resulting in lower spending for equipment and systems, Liptak added.

Federal Signal provides products and solutions to municipal, governmental and industrial customers.

Q2 MISSES STREET VIEW

For the second quarter, the company reported a net loss of $0.4 million, or 1 cent a share. Excluding items, the company posted earnings of 6 cents a share from continuing operations.

Revenue rose to $198.7 million from $198.5 million.

Analysts on average were expecting the company to earn 9 cents a share, before special items, on revenue of $203.3 million, according to Thomson Reuters I/B/E/S.

For the second quarter, orders jumped 23 percent compared to 2009, driven by industrial markets and FSTech businesses.

Liptak expects Federal Signal to report stronger sales in the second-half of the year compared to the first-half, as he sees the recent uptick in orders to translate into higher revenue.

The company operates in four segments -- Safety and Security Systems, Fire Rescue, Environmental Solutions and FSTech.

Shares of the Oak Brook, Illinois-based company were down 12.5 percent to $6.03 on the New York Stock Exchange in afternoon trade. They had earlier touched a low of $6.00. (Reporting by Fareha Khan in Bangalore; Editing by Anne Pallivathuckal, Prem Udayabhanu)