Wires

European shares fall as market braces for weak profits

* FTSEurofirst 300 down 0.9 pct, Euro STOXX 50 down 1.2 pct

* Investors brace for poor earnings season

* Metro, Michael Page fall after profit warnings

* Pick stock with high earnings quality - JPMorgan

By Francesco Canepa

LONDON, Oct 8 (Reuters) - European shares fell early onMonday as investors braced for a weak third-quarter earningsseason and the prospect of a greater-than-expected economicslowdown in parts of Asia.

The world's fourth-largest retailer, Metro

, wasamong top fallers after cutting its earnings outlook late onFriday, blaming rising unemployment in the euro zone and thesovereign debt crisis. Shares in the German group shed 3percent, having traded nearly their full-day volume average by1103 GMT.

Metro was joined by British recruiter Michael PageInternational

, which said on Monday it expects its yearprofit to be below market expectations, sending the shares down2.5 percent.

They were bad omens for the European third-quarter earningseason, scheduled to start later this week, which was expectedto see companies in the pan-European STOXX 600 index

report a 0.7 percent decline in earnings, according to ThomsonReuters Starmine data.

"Companies that issued weak profit warnings or weakpre-reports have gone down quite a lot, which is telling youpoor results are not priced in to some extent," Emmanuel Cau, astrategist with JPMorgan, said.

"We're still quite cautious about the market and we adviseclients to be into quality stocks, which have given back some oftheir gains in the last few month and offer a good (buying)opportunity," he added, citing British American Tobacco

and German business software maker SAP

.

Cau warned that the summer rally equity rally, led by eurozone banks, came at a time of falling earnings estimates, whichmeans European were now looking less attractive in the absenceof a turnaround in earnings momentum.

An MSCI index of euro zone shares traded at 10.5 times itsexpected earnings for the next 12 months, a 20 percent discountto Wall Street's stocks, which have superior earnings prospects,broadly in line with the average discount since 2002

.

The broader, pan-European the FTSEurofirst 300

was

down 0.9 percent at 1,102.01. The index rose 6.6 percent in themost recent quarter, lifted by expectations central banks woulddo more to shore up the global economy, but fell nearly 2percent from mid-September, when it hit a 14-month high.

French luxury group PPR

topped the index -- rising2.5 percent in volume 117 percent its daily average -- after asource said the group would announce its plans for a possiblestock market listing or spin-off of book and CD retailer Fnac onTuesday.

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Graphic of asset returns in 2012:

Euro zone debt crisis in graphics:

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MACRO CONCERNS

Macroeconomic concerns mounted on Monday as the World Bankcut its economic forecasts for the East Asia and Pacific region,saying the slowdown in China - the world's largest consumer ofraw materials - could get worse and last longer than expected.

Charts on the euro zone blue-chip Euro STOXX 50

index, down 1.2 percent at 2,501.60, and safe-haven German Bundfutures

, up 35 ticks, also suggested there were growingsigns of bearishness among investors.

"Bund futures are successfully testing support before we seehigher levels, which would suggest to me investors are riskaverse and loosing for some safety," said Roelof-Jan Van denAkker, a senior technical analyst with ING in Amsterdam.

"To confirm this we still need (the Euro STOXX 50) to breaksupport at (its most recent low of) 2,450."

He added that a close below 2,450 could open up a 150 pointdownside potential on the index, dragging it down to anunderlying trendline stating from June lows.

(Reporting By Francesco Canepa; editing by Ron Askew)

((francesco.canepa@thomsonreuters.com)(0044)(0)(2075423871)(Reu

ers Messaging: francesco.canepa.thomsonreuters.com@reuters.net))

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