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* Q2 diluted shr loss C$0.09 v year-earlier EPS C$1.27
* Forecasts lower lumber prices in H2 2012
TORONTO, July 21 (Reuters) - West Fraser Timber Co Ltd. (WFT.TO) reported a drop in quarterly earnings on Thursday as low U.S. housing starts and economic uncertainty cut into lumber and panel prices.
The softwood producer added that lumber prices in the second half are expected to be down from the first half as low housing starts in the United States continue to limit demand.
West Fraser said its second quarter earnings fell to C$10 million ($10.6 million), or a loss of 9 Canadian cents a diluted share, from profit of C$67 million, or earnings per share of C$1.27, in same period of 2010.
Revenue was down 7 percent at C$720 million from C$772 million in the year before period.
West Fraser said it was hit by sharp declines in lumber prices, along with higher Canadian log costs.
The company added that lumber shipments to Japan are stable and that lumber shipments to China continue to grow.
$1=$0.94 Canadian Reporting by Julie Gordon; editing by Peter Galloway