* FTSEurofirst 300 down 0.4 percent * AstraZeneca down sharply, warns of tough year ahead * Royal Dutch Shell knocked by results By Tricia Wright LONDON, Jan 31 (Reuters) - European shares fell on Thursday as investors waded through a stack of earnings reports, with disappointing results from heavyweights AstraZeneca and Royal Dutch Shell taking their toll on market sentiment. The FTSEurofirst 300 was 0.4 percent weaker at 1,166.31 by 1233 GMT, extending Wednesday's 0.6 percent drop, although the index remains on track to round off January in solid fashion with a near 3 percent rise for the month. The market may have been knocked over the last couple of days, but investors reckoned any corrections should be considered short-term, and that the rally which has hoisted the index to near two-year highs has further to run. "With markets looking overbought in the short term I would expect to see a few sharp dips along the way," Mike McCudden, head of derivatives at stockbroker Interactive Investor, said. "I wouldn't be surprised to see the FTSEurofirst 300 tick marginally higher in February as the general economic picture continues to improve." On the first big day of the European earnings season, AstraZeneca and Royal Dutch Shell were left nursing respective falls of 5.1 percent and 1.8 percent, with the pair accounting for around a fifth of the index's drop. AstraZeneca, Britain's second biggest drugmaker, said it faced a tough 2013, with earnings set to decline "significantly more than revenue" as operating costs rise. "Unlike rivals, Astra does not enjoy the cushion of alternative revenue streams such as consumer healthcare, with the group currently providing a major play on scientific development and innovation," Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers, said in a note. "Austerity and government efforts to curb health spending are not helping, whilst the general lack of optimism surrounding its developmental pipeline and already reduced cost structure potentially dampen its attractiveness as a takeover target." Trading volume in AstraZeneca was robust, at 203 percent of its 90-day daily average, against the FTSEurofirst 300 on 53 percent of its average. Meanwhile, oil major Royal Dutch Shell's fourth-quarter results significantly undershot expectations. "Overall, the Q4 results are slightly disappointing but medium-term growth targets are reconfirmed. We expect downward revisions to our forecasts for 2013 (currently EPS 477 cents) and will review our 'hold' recommendation after considering today's disclosures," Liberum Capital said in a note. The broker noted that the shares offer a yield of about 4.8 percent and "robust if unexciting" growth prospects, retaining its view that Shell remains attractive relative to BP. Among brighter spots, Ericcson jumped 9.1 percent on higher-than expected fourth-quarter core profit and revenue growth, raising hopes the world's top mobile telecom gear maker is beginning to shake off the global downturn. Trading volume in Ericcson stood at 243 percent of its 90-day daily average. While the earnings releases from AstraZeneca and Royal Dutch Shell may have darkened the mood on Thursday, Standard Life's Andrew Milligan noted that factors affecting pharma and oil are very different from those impacting the broader stock market. "Can we press higher? We certainly can - as long as we get an absence of major bad news and as long as companies continue to support investor hopes by being able to demonstrate that they've got some helpful cash to deliver back in dividends, share buybacks, or investment," said Milligan, head of global strategy at Standard Life Investments, which has 163.4 billion pounds ($258.1 billion) of assets under management.