* LSE revenues will be hurt by slow trading
* Exchange looking to diversify
* Icap expects revenues to grow 9 percent
By Luke Jeffs
LONDON, Nov 15 (Reuters) - The perils of depending on a single asset class for large chunks of revenue will become clear when the London Stock Exchange and Icap both report first-half results this week.
The LSE -- which relies heavily on European equities -- will report flat revenues at 310.6 million pounds ($500.4 million) in the first half year, according to the consensus forecast in Thomson Reuters I/B/E/S Estimates.
By contrast, UK broker Icap -- which trades currency, bonds and swaps globally -- is expected to report revenues up 7.5 percent to 869.5 million pounds on Wednesday, according to the consensus forecast.
"Cash equities trading volumes have not been strong for the period over which the LSE is reporting so some weakness in its main capital markets division is to be expected," said Daniel Garrod, analyst at Barclays Capital.
The LSE has seen its market share drop due to the entrance of new rivals into the market, and Chief Executive Xavier Rolet is looking to diversify the UK exchange, which last year derived 33.4 percent of its revenue from European equities.
The LSE's Sept. 29 trading statement set the tone for this week's results, with Rolet saying that performance reflected "generally variable market conditions", although there had been good activity in "parts of the business".
Rolet plans next year to deliver a pan-European derivatives platform to compete with Liffe, owned by NYSE Euronext, and Deutsche Boerse's Eurex.
The exchange is also working behind the scenes to develop its clearing capability, and last month hired Patrick Birley, the former chief executive of its current clearing supplier, LCH.Clearnet.
"Diversification is a sensible strategy, given the LSE's main global peers all have a broader balance across asset classes," said Garrod.
Analysts will also be keen to hear more about a crash of its trading system Turquoise, which the LSE said had taken place in "suspicious circumstances".
The LSE said on Nov. 2 it was conducting a "full investigation" into the events that caused the Turquoise crash earlier that day. The system has functioned normally since then.
Icap has sounded a more confident note, saying on Sept. 30 its revenue for the six months was expected to increase by approximately 9 percent, slightly ahead of the market consensus, to 881.8 million pounds.
Icap shares are up 10 percent so far this year, whereas the LSE's stock has gained just 3 percent. (Editing by Andrew Callus)
($1=.6207 Pound)