Miners lead European shares lower on demand worries

* FTSEurofirst falls 0.6 percent

* Miners lead as slowdown worries hit metal prices

* Financials fall as brokers downgrade on valuation

* Car makers slide as sales decline for 11th straight month

By David Brett

LONDON, Sept 18 (Reuters) - European shares edged lower on Tuesday, pulling back further from a 14-month high hit after central bank action to stimulate the global economy, led down by mining shares on outlook concerns as metals prices fall.

By 0744 GMT, the FTSEurofirst 300 was down 7.19 points, or 0.6 percent, at 1,109.39, having hit its highest level in over a year on Friday.

Heinz-Gerd Sonnenschein, strategist at Deutsche Postbank, said he expected equity markets to track sideways as investors await the next catalyst for further gains.

"We have seen strong moves by the central banks and it is now up to the (European) politicians to take the next step towards a stronger union," he said.

"In the meantime focus will switch back to fundamentals and companies will have to show what they can do, so the next earnings season could be stressful," Sonnenschein said, adding that on that basis he would stick with defensive stocks such as consumer staples in the short-term.

Mining stocks were the biggest fallers, having led the rally over recent days, weighed down by earnings concerns after Australia, the world's biggest exporter of iron ore, cut its revenue forecasts for the key steel making ingredient by a fifth on Tuesday.

With many sectors enjoying a positive re-rating in valuations after a strong rally and weak earnings season, some analysts are saying investors will need to see a pick-up in results if current valuations are to be sustained.

UK-listed insurer Aviva was a top faller, down 4.5 percent as Deutsche Bank and BofA Merrill Lynch cut their respective ratings on the company on valuation grounds.

BofA ML said: "We remain strongly supportive of the group's plans; however, even if these are delivered in full (which for the cost savings won't be clear before 2014), the narrowing price-to-earnings (PE) discount to the sector now leaves little room for disappointment."

VALUATION WORRIES

Aviva joined a host of financials weighing on equity markets with banks joining insurers on the fallers list.

Royal Bank of Scotland fell for a second consecutive session as Liberum cut its rating on the UK lender to "hold" from "buy" citing valuation concerns after Investec downgraded the taxpayer-supported bank on Monday.

Meanwhile, Swiss freight forwarder Kuehne & Nagel slid 2.6 percent as JP Morgan cut the firm to "neutral" from "overweight" citing a tactical downgrade on valuation grounds.

Renault shed 3.4 percent, in tandem with other car makers, after a report showed European car sales fell 8.5 percent in August, for an 11th straight monthly decline.

European shares have enjoyed a rerating to 11.8 times forward 12-month PE, around post-credit-crisis highs as investors interepreted the actions by central banks as having taken away some of the downside risk associated with the euro zone's debt problems.

Corporate earnings have so far yet to respond with the likes of Burberry and Christian Dior reporting poor numbers in recent days.

The market implied compound annual growth rate for European companies over the next five years is -2.4 percent, according to Thomson Reuters Starmine data.