August 27, 2009 / 2:31 PM / 9 years ago

UPDATE 1-BAE Systems loses U.S. vehicle contract

* Says not been awarded follow on production contract

* Shares down 4 percent

(Adds detail)

LONDON, Aug 27 (Reuters) - British defence giant BAE Systems (BAES.L) has failed to win a follow-on contract for the production of vehicles for the U.S. Department of Defense, sending its shares down nearly 4 percent.

The company, which generates more than half its $34 billion sales from the U.S., said the contract with the Family of Medium Tactical Vehicles (FMTV) programme was expected to generate $2 billion in both 2009 and 2010.

It said it had planned for the contract to deliver less than $1 billion annual sales thereafter, but could not yet calculate the full implications of the loss.

BAE shares were down 4 percent by 1426 GMT, valuing the business at 11.8 billion pounds.

Reporting by John Bowker, Editing by Ben Deighton

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