* Takes 3.6 bln euros of writedowns
* Q3 net loss 2.85 bln euros
* Underlying net profit 716 mln euros vs forecast 786 mln
* Got Bankinter stake bids, but price fell short
* Shares down over 8 pct, biggest drop by European blue-chip (Rewrites with additional comments, updates shares)
By Christian Plumb and Matthias Blamont
PARIS, Nov 9 (Reuters) - Falling profits in retail and investment banking left investors worried whether Credit Agricole is on the mend after the French bank took $4.6 billion of writedowns to try to draw a line under ill-fated deals.
Shares in France's No.3 bank were down over 8 percent in Friday afternoon trading after it missed third-quarter profit forecasts, even after stripping out the 3.6 billion euros of writedowns, including on investments in Greece, Italy and Spain.
"You have to concentrate on what you are good at," said Yannick Naud, a portfolio manager at Glendevon King Asset Management in London. "That's the main problem with Credit Agricole. Except for retail banking in France, there are very few activities in which they are market leaders."
Banks across Europe are slashing costs and shedding assets to cope with tougher regulations aimed at preventing a repeat of the 2008 financial crisis. The task has been complicated by a weakening economy as governments drive through austerity measures to clean up their own finances.
Credit Agricole announced a 1.96 billion euro writedown on the sale of Greek unit Emporiki, in line with expectations but taking the total cost of its disastrous foray into the debt-stricken country to around 7.5 billion euros.
Including writedowns on its soon-to-be sold Cheuvreux brokerage, its Italian consumer credit business, Spain's Bankinter, and losses on its own debt, the bank slumped to a quarterly loss of 2.85 billion euros.
Even stripping out the one-off items, Credit Agricole's underlying net income came in at 716 million euros, short of analysts' average estimate of 786 million.
"The results are quite disappointing," said Yves Marcais, a sales trader at Global Equities. "You have to look at the numbers stripping out all the exceptionals to analyse them properly, but even then they look weak."
Credit Agricole, majority controlled by a network of regional cooperative banks, said it had received bids for its Bankinter stake, but the price had been disappointing.
"There are a lot of people who came to see us to propose (opportunities to) sell the shares in a block," Chief Financial Officer Bernard Delpit told reporters.
"We didn't accept them because the prices offered weren't interesting," he added, without giving any details.
Optimism about the sale of Emporiki, along with European Central Bank President Mario Draghi's July pledge to defend the euro, had led Credit Agricole shares to double in value over the past 15 weeks.
Credit default swaps for Credit Agricole have also narrowed significantly in recent months, with five-year CDS improving to about 185 basis points from around 400 in May. However, they widened moderately on Friday to 192 basis points, nudging up the cost of insuring the French bank's debt against default.
The weaker-than-expected results could add to pressure on Chief Executive Jean-Paul Chifflet, a veteran of the lender's powerful regional savings banks, to show where he's taking the business after 2 1/2 years almost entirely devoted to reversing its one-time international and investment banking ambitions.
"As a CEO he has a bit of time to breathe and think about what the strategy should be instead of just cutting," Glendevon's Naud said. "The window is three to six months."
Chifflet told reporters the results showed progress in the bank's restructuring plan, bolstered its capital and underlined the strength of its retail banks "despite an economic environment which continued to get worse in the third quarter."
Credit Agricole, founded 118 years ago as a federation of regional agricultural lenders, saw quarterly revenue slide by nearly a third to 3.43 billion euros, lagging analysts' average estimate of 4.17 billion.
The lender said the sale of Emporiki bolstered its capital, increasing its Core Tier 1 ratio to 9.8 percent on a proforma basis. But it did not provide an estimate of capital according to tougher Basel III standards.
Chifflet told reporters the bank would not need a capital hike to reach Basel III targets.
Credit Agricole's French retail arm saw profit decline 3.5 percent at its regional banks and 11 percent at its LCL unit. Profit at its Italian Cariparma unit plunged 44.5 percent.
At the same time, revenue at Agricole's regional banks rose 3.3 percent, a positive note in an environment where bigger rivals Societe Generale and BNP Paribas saw declines in domestic retail revenue.
Investment banking, an area of strength at many banks this quarter including cross-town rivals SocGen and BNP, saw a 15 percent drop in profit on an adjusted basis as Credit Agricole continued to cut back the unit's operations.
$1 = 0.7857 euros Additional reporting by Alexandre Boksenbaum-Granier; Editing by Mark Potter