UPDATE 1-Avandia stocks write-off weighs on Glaxo in Q3

* EPS 28.2 pence vs consensus forecast 26.2 pence

* Revenue 6.813 bln pounds vs 6.849 bln pounds

(Adds details, shares)

LONDON, Oct 21 (Reuters) - GlaxoSmithKline GSK.L earnings slipped 1 percent in the third quarter, hit by the cost of writing off stocks of its controversial diabetes drug Avandia and increased generic competition for herpes drug Valtrex.

Both elements had been anticipated by investors and the earnings number was better than analysts had generally expected, although sales were slightly light.

Shares in the group were 0.9 percent lower by 1110 GMT on Thursday, in line with a weaker European drugs sector .SXDP.

Like other major drug companies, Glaxo is suffering from multiple patent expiries on key medicines, although it has taken the hits earlier than many of its rivals and CEO Andrew Witty now sees sustainable growth going forward.

Pretax profit before major restructuringin the third quarter was 1.971 billion pounds ($3.11 billion), equivalent to earnings of 28.2 pence per share, on sales up 1 percent to 6.813 billion.

Analysts had forecast EPS of 26.2p and turnover of 6.849 billion, according to the Thomson Reuters I/B/E/S consensus.

Last month European regulators suspended Avandia and severe restrictions were placed on its U.S. sales, following evidence suggesting a linking to heart attack risk. Glaxo said at the time it would take a charge as result.


GRAPHIC on pharma sector:


The next trigger for Glaxo shares could be approval of its keenly awaited new drug Benlysta, the first new treatment for lupus in 50 years, which is expected to have annual sales of $2.3 billion by 2014, according to Thomson Reuters consensus forecasts.

The new drug, being developed with Human Genome Sciences HGSI.O, will be reviewed by a U.S. advisory panel on Nov. 16 and the Food and Drug Administration is due to decide whether to approve it by Dec. 9.

Glaxo's results follow a mixed picture from European rivals in the face of generic competition and increased pressure on prices, with Roche ROG.VX reporting disappointing sales but Novartis NOVN.VX beating forecasts. [ID:nLDE69J13F]

Reporting by Ben Hirschler; Editing by Paul Sandle