By Alwyn Scott

NEW YORK (Reuters) - General Electric Co <GE.N> on Friday reported weak demand for new oil, gas and transportation equipment, raising concerns about its full-year performance and sending its shares down as much as 2.8 percent.

Still GE, long considered a bellwether for the U.S. economy, posted adjusted second-quarter earnings of 51 cents a share that topped analysts' estimates of 46 cents, according to Thomson Reuters I/B/E/S.

GE also affirmed its 2016 operating outlook and forecast that strong growth would continue in the second half.

But investors focused on a 16 percent decline in new orders from continuing businesses amid weakness in oil and gas prices and commodity markets that undercut demand, raising questions about its forecast.

"You're counting on the second half being pretty strong, especially in the power business," said Jeff Windau, an analyst at Edward Jones in St. Louis, referring to power plant sales.

"Those are capital intensive purchases and if those get pushed out even just a little bit" it could weaken GE's performance.

GE expects sales for the year to grow at the low end of its 2 percent to 4 percent target range. But it said reduced orders, which represent bookings for future sales, would not affect revenue, which comes as deliveries of actual products and is on course.

"We have an enormous backlog (of orders)," Chief Financial Officer Jeff Bornstein said in an interview. "We don't view it as a concern for future revenue."

About 70 percent of the sales that GE expects this year already are in the backlog, he said.

Investors also reacted to GE being about $1 billion short of estimates on free cash flow for the quarter, said Deane Dray, an analyst at RBC Capital Markets. "That was attributed to slower accounts receivable collection," he said. "You don't typically hear GE talk about that."

With the stock having had a strong run, he added, "a little bit of profit-taking is understandable."

GE shares fell 2.2 percent at $31.87 in mid-day trading on the New York Stock Exchange.

Other parts of the business did well. GE's revenue rose 15 percent to $33.49 billion, helped by a 31 percent rise in the power business, but that reflected the acquisition of the Alstom <ALSO.PA> power business last year.

Sales from continuing industrial operations, known as organic segment revenue, fell 1 percent to $24.4 billion, less than some analysts expected. Power sales without Alstom were up 2 percent.

Net profit was $2.73 billion, or 30 cents a share, compared with a loss of $1.36 billion, or 13 cents a share, in the year-earlier quarter.

GE's order backlog rose 1.3 percent to $320 billion, reflecting a 2 percent rise in services orders to $233 billion, while equipment orders fell 2.2 percent to $86 billion.

During the quarter, GE returned $18 billion to shareholders through stock buybacks.

The company shed its designation as a non-bank systemically important financial institution after divesting most of its GE Capital business. The change is expected to free about $18 billion in capital, which GE had pledged to return to shareholders through buybacks.

(Editing by W Simon and JS Benkoe)