Tech stocks tumble as UK's FTSE slides
* FTSE 100 down 1.4 pct
* Hargreaves Lansdown hit as MS cuts price target
* ARM and Sage suffer in wake of Nasdaq sell-off
* Beaten-down supermarket stocks in demand
By Tricia Wright
LONDON, April 11 (Reuters) - Technology stocks tumbled on Friday as Britain's benchmark equity index fell alongside global markets, opening it up to its biggest weekly loss in around a month.
Financial services and investment management group Hargreaves Lansdown topped the declining stocks on the FTSE 100, off 6.1 percent. Traders said the shares fell after Morgan Stanley cut its price target for the stock.
The investment bank cut the target price to 1,495 pence from 1,670 pence - still above current levels of around 1,243 pence - and said in a note that pressure on pricing and weaker net interest income will weigh on Hargreaves Lansdown's earnings over the coming year.
The blue-chip FTSE 100 index <.FTSE was was down by 93.63 points, or 1.4 percent, at 6,548.34 points by 1346 GMT.>. The index is down about 3 percent this year, despite getting close to its best level since early 2000 in January.
Technology companies ARM and Sage were among the worst-performing stocks on the FTSE. Their declines came after a 3.1 percent slump overnight on the United States' technology-dominated Nasdaq index.
ARM, whose chip designs feature in most smartphones, fell 5 percent to 953.5 pence in relatively brisk trading. Software developer Sage declined 2.4 percent.
"I would leave ARM well alone for now. I'd be happy to see it drift down to 930 or 910 pence before phasing back into the stock," said Beaufort Securities sales trader Basil Petrides.
Frothy valuations are keeping investors from putting more money to work in equities. The FTSE 100 is trading on a 12-month forward price/earnings ratio of 13.2 times, against its five-year average of 11 times, Thomson Reuters Datastream shows.
Also acting as a deterrent, analysts have been steadily lowering profit forecasts for UK companies since the start of 2014, data from Thomson Reuters Datastream shows, a signal of potential tough times ahead for the index.
"We do think the markets are vulnerable here," said Ian Richards, global head of equities strategy at Exane BNP Paribas. "From a micro perspective, we're on valuations above normalised levels (and) there's an earnings backdrop which is characterised by downgrades."
Revised earnings per share estimates for UK companies over a rolling three-month period have worsened since late January. The average estimate has fallen 7 percent in the past three months, compared with a 3.2 percent drop in the three months to late January, according to Datastream.
Analysts said the revisions reflected the exposure of many FTSE 100 companies to emerging markets. The relative strength of sterling against the euro also cut into UK corporate profits.
Supermarkets outperformed the broader market as investors bought back into the badly beaten down stocks.
"These supermarkets are probably defensive now ... they've already had their bear market and that's where the money seems to be going," said Manoj Ladwa, head of trading at TJM Partners.
Britain's "big four" grocers - Tesco, Wal-Mart's Asda, Sainsbury's and Morrisons - are all being outpaced by sales growth at discounters in a fragile economic recovery, but Morrisons has fared the worst.
Of the big three listed stores - Sainsbury, Tesco, and Morrisons - Morrisons' shares have suffered the biggest drop this year by some margin, off around 25 percent.
As such, it led the FTSE 100's meagre list of seven gainers on Friday, up 1.8 percent. Sainsbury's rose 0.4 percent. Tesco dipped 0.4 percent. (Additional reporting by Sudip Kar-Gupta and Blaise Robinson; Editing by Larry King)