Telecom Italia falls as European equity rally stutters
* FTSEurofirst 300 down 0.3 pct, Euro STOXX 50 falls 0.4 pct
* Telecom Italia falls to record low on spin-off doubts
* Satellite company SES hit by Morgan Stanley downgrade
* Medium-term trend remains positive -ACIES fund manager
LONDON, July 16 (Reuters) - European shares edged down on Tuesday, slipping back after rallying from 2013 lows over the last two weeks, with Telecom Italia underperforming due to uncertainty over the company's plans to spin off its fixed-line network.
The pan-European FTSEurofirst 300 index was down by 0.3 percent at 1,196.76 points in mid-session trading, while the euro zone's blue-chip Euro STOXX 50 index fell 0.4 percent to 2,676.81 points.
Telecom Italia fell 3.5 percent to a record low, making it one of the worst-performers on the FTSEurofirst 300. The company has put on hold spin-off plans for its network, which could hamper efforts to reduce debt.
Satellite company SES also featured among Europe's worst performers, falling 3.6 percent. Traders attributed the fall to a move by Morgan Stanley to cut its rating on the stock to "underweight" from "equal-weight".
The FTSEurofirst 300, which has risen some 6 percent since the start of 2013, hit a 5-year high in late May of 1,258.09 points.
It dropped to a 2013 low of 1,111.11 points in late June on expectations the U.S. Federal Reserve would scale back economic stimulus measures. It has since recovered as central banks have sought to reassure that they will continue to support the global economy.
Andreas Clenow, hedge fund trader and principal of ACIES Asset Management, said the short-term trend might be for equities to pause after the move up over the last two weeks, but he felt the medium-term trend remained positive.
He said he was putting on "long" positions at current levels to bet on further gains. "I am quite optimistic about the UK and European markets. I am entering 'longs' at these levels," he said. "In the short-term, the move up may pause for breath, but I'm prepared to take that pull-back and I think the medium-term trend is to the upside."
Many analysts are citing signs of a gradual global economic recovery and prospects of stronger corporate earnings as supportive for equities.
Scott Meech, co-head of pan-European equities at Union Bancaire Privee (UBP), said he believed now was a good time to add to European equity holdings, citing supermarket chains Carrefour and Dia, and Dutch electronics group Philips among his favoured picks.