UPDATE 1-UK's FSA says tough conditions here for some time

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By Clara Ferreira-Marques

LONDON, April 8 (Reuters) - It is too soon to call the bottom of the current cycle, and financial market conditions are set to remain strained for some time, Britain's financial watchdog warned an industry conference on Tuesday.

"I think we can expect uncertain and turbulent market conditions to continue for the foreseeable future," said Callum McCarthy, chairman of the Financial Services Authority (FSA).

The FSA has for some time been warning of growing risks and said earlier this year that banks were navigating their choppiest waters since the early 1990s.

Britain's banking sector was rocked last September by the near-collapse of lender Northern Rock, which the government has since been forced to nationalise, and insurers have also been left badly bruised by turbulent markets.

"2007 was undoubtedly a difficult year for firms, investors and regulators alike. In 2008 the operating environment remains tight, and it is likely that stressed financial conditions will persist for some time," FSA Chief Executive Hector Sants told executives at the regulator's annual insurance conference.

Sally Dewar, the FSA's head of wholesale and institutional markets, said it was simply too soon to say whether the recent spate of bank writedowns signalled that an end was in sight.

"Only time will tell if we have reached the bottom of the cycle," she said. "No one can guess what is going to happen."