European shares flat on mixed earnings day; Lufthansa weak
* FTSEurofirst 300 unchanged at 1281.44
* Airlines fall as Lufthansa profit forecast disappoints
* ARM Holdings hit by royalty concerns
* Norwegian insurer Gjensidige rallies after earnings beat
* Company reports overshadow run-up to U.S. payrolls
LONDON, Oct 22 (Reuters) - European shares were flat in early trade following a mixed batch of company reports, with airlines the top fallers after weak results from Germany's Lufthansa.
After eight straight days of gains the FTSEurofirst 300 was unchanged at 1,281.44 at 0740 GMT, having hit a five-year high in the previous session. The broader STOXX 600 also was unchanged at 319.55,.
Equities have rallied since last week's debt deal in Washington as well as on expectations that, because the U.S. debt crisis has not been resolved, the Federal Reserve will wait longer before scaling back its stimulus programme.
There was caution before the delayed U.S. September non-farm payroll figures, due at 1230 GMT and potentially offering more clues to future Fed policy shifts, but the market was dominated by a heavy slate of company updates.
Germany's Lufthansa fell 2.3 percent after it issued a disappointing profit forecast for 2013, dragging down peers IAG and easyJet.
Chip designer ARM Holdings, whose technology is used in Apple's mobiles, fell 4.5 percent despite licensing demand delivering a third-quarter beat as concerns lingered over royalty weakness, according to analysts.
A strong runs of gains has seen the Stoxx 600 re-rate on a price-to-earnings of 13.29 times against an 10-year average of 12 times, according to Datastream, so focus is falling on corporate earnings which are under pressure to justify the re-rating.
"There has been a massive risk de-rating - certainly in Europe over the past year - which has been taken lower with the agreement in the United States. Even so, we are getting concerned with valuations and that earnings are not kicking through," Chris Parkinson, head of equity strategy at Christopher Street Capital, said.
An overshoot in recovery expectations prompted UBS to double-downgrade ArcelorMittal to "sell" from "buy". The steelmaker slipped 2.3 percent.
Nordic firms delivered better news.
Norwegian insurer Gjensidige rallied 7.1 percent after announcing third quarter earnings that beat forecasts and a surprise special dividend.
Swedbank, Sweden's second largest bank by value, climbed 4.6 percent after operating profit beat forecasts.
UK consumer goods firm Reckitt Benckiser Group rose 4.6 percent after reporting higher revenues and saying it was reviewing options for its pharmaceuticals unit
Of the 18 companies in the STOXX 600 that have so far reported third quarter earnings, 61 percent have beaten analyst expectations.
But overall, earnings of companies in the index are expected to decline 1.4 percent this quarter, compared with an average 9.7 percent gain a year ago.
Analysts at Nomura remain bullish on a 6-to-12-month view on European equities, but said: "Considering the recent relative outperformance, not to mention the 33 percent gains accrued since June last year, investors looking to move money into Europe may become increasingly discerning on where they invest."
It said the most attractive return prospects at the country index level fall on Italy and Spain and it also recommends selectively overweighting equity country indexes that have higher than average exposure to cyclical shares.