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Baltic index hits two-month trough on sluggish demand

Oct 3 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry bulk commodities, slid to a near two-month low on Thursday, as weak demand for iron ore and lower industrial activity continued to weigh on the index.

* The Baltic index, which reflects rates for capesize, panamax and supramax vessels, declined 46 points, or 2.55%, to 1,757, recording its seventh consecutive decline.

* The overall index was at its lowest level since Aug. 9.

* The capesize index fell 218 points, or 6.75%, to 3,013, its lowest in three months.

* China's week-long national celebrations have drastically reduced steel activity, said Randy Giveans, vice president, equity research at Jefferies.

* The average daily earnings for capesizes, which typically transport 170,000-180,000 tonne cargoes such as iron ore and coal, declined by $1,005 to $23,425.

* The recent market correction is attributable to a seasonal slowdown in iron ore demand, shipbroker Fearnleys said in a note on Wednesday.

* "Coupled with this, there have been too many vessels in ballast towards the South Atlantic, with this number rising from 126 at the start of September to 169 at the latest reading."

* The panamax index slipped for a thirteenth straight session, down 3 points to 1,722.

* Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, fell slightly by $23 to $13,796.

* The supramax index dropped 13 points to 1,204. (Reporting by Nakul Iyer in Bengaluru)