European shares dented by earnings, more gains eyed
* FTSEurofirst 300 down 0.4 pct
* Enel, Adecco, Inditex down after results
* FTSE MIB in 6-week downtrend channel
By Toni Vorobyova
LONDON, March 13 (Reuters) - European equities edged lower on Wednesday, weighed down by a string of weak corporate earnings and consolidating recent strong gains before what analysts expect will be a push to fresh multi-year highs.
Italian utility Enel, staffing firm Adecco , British security group G4S and Spanish-listed retailer Inditex were among the companies who fell after reporting results.
Data showing a steeper than expected fall in euro zone factory output in January also weighed on sentiment , as did the subdued demand and higher borrowing costs at an Italian sovereign bond auction.
The pan-European FTSEurofirst 300 was down 0.4 percent at 1,189.47 points by 0823 GMT, edging further away from a 4-1/2 year peak of 1,197.73 points set at the end of last week.
"The main risk in the short term is the lack of growth in Europe. The hard economic data are not falling into place at the moment," said Paul Jackson, strategist at Societe Generale.
"They (European equities) do need a break for a short term. They need to take a bit of a breather, but longer term European equities are undervalued."
Among the major regional indexes, the Italian FTSE MIB was the biggest faller, extending losses after the bond auction to trade down 1.8 percent at one week lows.
Unlike most of its peers - which have recently hit multi-year highs - the Italian benchmark has been stuck in a technical downtrend channel for the past six weeks, with investors spooked by political uncertainty in the face of an election stalemate.
Around a third of Wednesday's fall, however, came from heavyweight Enel, which dropped 5.6 percent after it posted a slump in 2012 profits and said this year's earnings will be even weaker. Spain's Endesa, in which Enel owns 92 percent, dropped 5.1 percent.
European utilities have been among the worst performers in the current reporting season, with 47 percent missing full year earnings expectations against the sector-wide average of 40 percent, according to Thomson Reuters StarMine.
"It's difficult to see a positive environment for that sector at the moment, because it's difficult to see governments allowing them to pass on any costs to consumers ... It's probably the most underweighted sector across the board," said Kevin Lilley, European equities fund manager at Old Mutual AM.
Overall, though, he played down the significance of this earnings season's misses.
"We are in the transitionary phase of the cycle - leading indicators started bottoming out in the fourth quarter, but that hasn't fed through yet into the real economy... Second-quarter figures should show a better trajectory," he said.
"I am positioned for a bullish market and growth, with a 6 percent overweight on cyclicals and ... with no cash."
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