* FTSE 100 off 0.3 pct
* Western sanctions on Russia dampen sentiment
* ITV jumps after Liberty Global buys 6.4 pct stake
* Rexam hit by Deutsche Bank downgrade
By Tricia Wright
LONDON, July 17 (Reuters) - UK shares retreated on Thursday as new Western sanctions on Russia hampered stocks with exposure to the country, though ITV jumped after cable group Liberty Global bought a stake in the free-to-air broadcaster.
ITV rose 7 percent after the move by its biggest shareholder BSkyB to sell 6.4 percent of the company to Liberty Global sparked hopes for a full takeover.
"ITV is now likely to be seen as a potential M&A story," analysts at Liberum wrote in a note.
"We would not expect an immediate bid: but Liberty's purchase suggests it may be interested in acquiring the asset at some point as Virgin Media (which Liberty owns) tried to do nearly a decade ago."
ITV was the top blue-chip gainer by some margin against a subdued wider market, with the FTSE 100 down 20.54 points, or 0.3 percent, at 6,764.13 points by 0826 GMT, having notched up its strongest one-day percentage gain since March in the previous session with a 1.1 percent rise.
Darkening the mood were mixed earnings and new sanctions on Russia by the West which analysts said could raise again the prospect of tit-for-tat measures that could harm the European economy and stocks with exposure to Russia.
For a factbox on European firms most exposed to Russia, as of March and based on MSCI data, click on
Fund managers and traders said they were reluctant to buy into the market at present.
"Geopolitical worries continue to make the headlines ... That combined with the summer doldrums means that there is no rush to get involved buying stocks," said Lex van Dam, a hedge fund manager at Hampstead Capital.
Mark Ward, Sanlam Securities' head of trading, was of a similar view - neutral on the FTSE 100 after Wednesday's jump, preferring to wait and benefit from further market weakness.
Can maker Rexam, one of the FTSE 100 companies with most exposure to Russia, topped the fallers' list, off 3.1 percent, knocked too by a downgrade to "hold" from "buy" by Deutsche Bank, which cited factors including valuation grounds.
"While we think earnings will benefit significantly from outsized performance in LatAm in 2014, we believe this expectation is largely priced into the stock," Deutsche Bank said. "Moreover, we have concerns about the rising aluminum premium in Europe, which Rexam currently is unable to pass through to customers."
In earnings-related moves, Anglo American fell 1.3 percent despite reporting higher iron ore and copper output for the first half of the year. Energy supplier SSE, which said the market was still "very competitive" but confirmed its guidance, shed 1.2 percent.
Property developer Land Securities saw its shares advance 0.9 percent after saying it had enjoyed a strong start to the year. (Editing by Catherine Evans)