UPDATE 1-European shares slip from highs, knocked by autos and insurers
* FTSEurofirst 300 down 0.2 pct * BMW hits autos, insurers knocked by RSA outlook * Two in three companies missing revenue forecasts -StarMine By Alistair Smout PARIS, Nov 5 (Reuters) - European shares slipped off a five-year high on Tuesday, led lower by car-makers and insurers as more European blue chips undershot earnings expectations. Uncertainty in the run-up to an ECB policy meeting also kept investor enthusiasm - and volumes - in check. Autos were led lower by BMW, which dropped 2.9 percent after the German carmaker said quarterly profit at its auto unit fell more than expected, hurt in part by price discounts in core European markets. Renault fell 2.2 percent, extending a recent slide, after shares in Japanese partner Nissan tumbled following a profit warning. The broader Autos and Parts index fell 1.1 percent, the top sectoral faller in Europe. Halfway into the European earnings season, 52 percent of STOXX Europe 600 companies have missed profit forecasts, and two-thirds have missed revenue forecasts, according to data from Thomson Reuters StarMine, compared with the second-quarter result season during which only 42 percent of companies missed profit forecasts. "You can manipulate earnings expectations ... but it's harder to do that with revenues," Andy Ash, head of trading at Monument Securities, said. "The rally we've had over the last year has essentially been through multiple expansion and not through earnings, and sooner or later the market sees through that," he said, referring to investors paying more for stocks because they see economic risks abating, even though earnings have not increased. The FTSEurofirst 300 index of top European shares closed down 0.2 percent at 1,291.58 points, after rising as high as 1,297.29 in early trade, a level not seen since mid-2008. Insurers fell 1.1 percent after Britain's largest general insurer RSA said last week's storms in northern Europe would hit profits, sending its shares tumbling 6.3 percent. Legal & General fell 2.2 percent despite posting higher-than-expected sales, as a recent strong run and steep valuation meant its figures were not as favourable as some had hoped. "We still do not see any value within our valuation framework, though we acknowledge the positive trends in the business," Roderick Wallace, S&P Capital IQ Equity Research Analyst, said in a note. The stock had been up nearly 47 percent for the year. In Europe, recent tame inflation figures have sparked speculation about a possible rate cut by the European Central Bank when it meets on Thursday, though all but one of 23 euro money market traders polled by Reuters on Monday expect the ECB to leave borrowing costs unchanged at 0.5 percent. "The market would be very disappointed if they don't get some guidance of a rate cut soon," Monument's Ash said. "I think a rate cut is now factored into the market (as happening) before the end of December."
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