European shares dip as earnings continue to disappoint
* FTSEurofirst 300 drops 0.5 percent
* Infineon knocked by weak sales and outlook
* Vodafone reverses early losses despite revenue miss
* Norsk Hydro tumbles after placement
LONDON, Nov 12 (Reuters) - European shares fell on Tuesday, drifting away from near five-year highs after a poor revenue report from German chip maker Infineon highlighted weak domestic demand, which is weighing on this quarterly earnings season.
Infineon fell 5 percent after flagging a revenue drop at all of its units for the current fiscal quarter, even though earnings came in above estimates.
"Infineon is being hit by a combination of its revenue and the outlook, which was disappointing versus consensus," Nick Xanders, head of European equity strategy at brokerage BTIG, said. The trend for weaker revenues this quarter stemmed from a combination of currency effects from a strong euro and weak demand in the region, he said.
Half of the 80 percent of Stoxx Europe 600 companies that have reported so far have missed profit forecasts, and nearly two-thirds have missed revenue forecasts, according to data from Thomson Reuters StarMine.
Vodafone, a possible bid candidate for U.S. firm AT&T, also reported a drop in revenue, hit by very weak trading in Europe, but its shares rallied from early falls to trade 1.6 percent higher.
"Vodafone is all about AT&T, and news of that pursuit, so earnings don't really matter," Xanders said.
The biggest index faller was Norwegian aluminium producer Norsk Hydro, which slumped 5.6 percent after Brazilian miner Vale sold most of its stake in the group.
Building materials company CRH jumped 3.2 percent, the top riser on the FTSEurofirst 300, after revenues rose, although the increase was driven by demand from the United States as trading in Europe remained weak.
The pan-European FTSEurofirst was down 0.5 percent at 1,291.92 at 1122 GMT, 1.6 percent down from five-year highs hit last Thursday, but has still gained more than 16 percent since June.
The index has traded sideways since giving away gains made in reaction to the European Central Bank's surprise rate cut last week, with public holidays in France and the United States on Monday hitting volumes.
"Some are getting nervous about the lack of volume so, if you've got any decent performance, you're probably not going to get much more upside from here," said Ioan Smith, managing director of KCG Europe.
"The risk/reward will be skewed to shutting up shop and booking those gains."