UPDATE 2- FCStone swings to Q3 net loss

* Q3 net loss from cont ops $0.29/shr

* Excl items co would have Q3 profit of $0.02/shr

* Q3 rev $57.5 mln vs $83.6 mln last year

(Adds conference call details, analyst comments, updates share price)

By Brenton Cordeiro

BANGALORE, July 9 (Reuters) - Commodity risk management firm FCStone Group Inc FCSX.O swung to a quarterly loss, hurt by a bad debt provision, higher professional fees and severance charges.

The company posted a net loss from continuing operations for the third quarter of $8.1 million, or 29 cents per share, compared with a net income from continuing operations of $8.4 million, or 29 cents a share last year.

Excluding items, FCStone had a net income of 2 cents per share, the company said.

"The earnings were disappointing but the signals are maybe they're through the worst," said Niamh Alexander, analyst at Keefe, Bruyette & Woods.

"During the third quarter, we experienced significantly lower exchange-traded and over-the counter (OTC) contract trading volumes, primarily from customers within the agricultural, financial and energy markets," the company said in a statement.

However, it added in a conference call, that open positions in its commodity-risk management business and energy OTC volumes had improved from their levels at the end of the second quarter.

"If the current volumes continue, we expect margins in this area to expand to more normal levels in the fourth quarter," Chief Executive Pete Anderson said in the call.

Analyst Alexander said that she viewed the turn in open interest and trading volumes as "favourable."

Revenue for the third quarter ended May 31, was $57.5 million, from $83.6 million a year ago.

Analysts were looking for a loss of 11 cents per share, excluding items, on a revenue of $50.77 million, according to Reuters estimates.

Earlier this month, securities firm International Assets Holding Corp (IAAC.O) agreed to buy FCStone in an all-stock deal valued at about $130 million [nBNG513528 ].

Alexander said she saw no impact of the earnings results on the merger, but added that she expected FCStone investors may want "better terms," saying the investors were being asked to buy into a stock that is less liquid and has more difficult earnings visibility.

Shares of the company were up over 8 percent at $4.13 in afternoon trade on Nasdaq. (Editing by Jarshad Kakkrakandy)