UPDATE 2-Emerson order growth slows, shares fall

* Total trailing 3-month orders up 10 pct

* Forex reduces orders by 7 percentage pts

* Shares fall 3.4 percent (Adds details on segment performance, Norway agreement, stock reaction)

NEW YORK, Aug 24 (Reuters) - Order growth slowed at industrial conglomerate Emerson Electric Co (EMR.N) in the three months ended in July, while unfavorable foreign exchange eroded the value of total orders at an increasing pace, Emerson showed in a regulatory filing on Tuesday.

Emerson shares fell 3.4 percent to $45.50 in early trading, a steeper fall than other diversified industrial companies.

Total trailing three-month orders were up 10 percent in July, down from a range of 10 percent to 15 percent in May and June.

Currency exchange rates reduced orders by 7 percentage points, a bigger impact than in the prior two months. Foreign exchange was a net positive to orders earlier this year.

"We expect underlying order growth to continue moderating and return to more normal levels as comparisons become less favorable in future months," Emerson said in its filing with the Securities and Exchange Commission.

Orders are an indicator of future revenue. In the past, they have also correlated with the company's stock price.

Emerson, which does business in more than 150 countries, gets about a third of its revenue from emerging markets. About 21 percent of its 2009 sales were from Europe, where the currency has weakened against the U.S. dollar. One euro EUR= bought about $1.30 at the end of July, compared to about $1.43 a year ago.

When overseas sales are translated into U.S. currency, dollar strength erodes their value. Multinational companies can offset some of that impact by manufacturing locally. Of Emerson's 250 manufacturing locations, 165 are located outside the United States.

CURRENCY HIT

Total orders were flat in Emerson's high-margin process management segment, its biggest by revenue, but would have been up 15 percent if foreign exchange were factored out. Oil and gas orders have improved globally, and power and nuclear markets are strong, the company said.

The process business makes systems for automating production in process industries like chemicals and energy, as well as valves and measurement devices. It gets only about a third of its sales from the United States, making it the most international of Emerson's five segments.

Separately, Emerson said the process management unit was one of three suppliers named by Norwegian oil producer Statoil (STL.OL). The five-year agreement covers safety and automation systems, including engineering services, for new capital projects and upgrades to existing facilities, Emerson said, without providing a value for the supply agreement.[ID:nBw245120a]

Statoil has fast-tracked development of smaller oil finds off Norway, that company said on Tuesday. [ID:nLDE67N0HS]

Emerson's orders were up by 20 percent or more in industrial automation, the same pace as in May and June.

A slowdown was most visible in Emerson's climate segment, where orders were up 5 percent to 10 percent, down from at least 20 percent growth earlier.

The company said it saw continued strong demand in Asia for its air conditioning systems and other climate technology but noted comparisons with a year ago were becoming harder. The climate business was among the first to recover in 2009. (Reporting by Nick Zieminski, editing by Gerald E. McCormick, Dave Zimmerman)