Eutelsat plunges as European shares edge lower; Bouygues up

(ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report)

* FTSEurofirst down 0.5 percent

* Eutelsat drops 30 percent after outlook cut

* UnipolSai leads insurance sector lower

* Bouygues rise on well-received results

By Danilo Masoni

MILAN, May 13 (Reuters) - European shares lost ground on Friday, with satellite firm Eutelsat plunging after slashing its outlook for the year, while Bouygues rose on well-received results.

The pan-European FTSEurofirst 300 index fell 0.5 percent by 0810 GMT, while the euro zone’s blue-chip Euro STOXX 50 index fell 0.8 percent.

European markets have lacked clear direction in recent weeks, with some investors blaming strength in the euro and uncertainty surrounding a referendum on EU membership in Britain and a political stalemate in Spain.

“We’re are quite cautious about the European market even though valuations are not expensive. Before taking big bets investors need to know what will happen on the political front and where will the euro go,” said Matteo Ramenghi, Chief Investment Officer at UBS WM Italy.

Eutelsat fell 30 percent, making it the biggest faller in the region. The satellite firm cut its outlook for the full year after markets closed on Thursday and was met with a spate of ratings downgrades on Friday.

“Such a heavy hit to forecasts, coming from across the applications, will knock confidence in the story,” Barclays said in a note, downgrading the stock to “equal-weight” from “overweight” and slashing its target to 22 euros from 31 euros.

The insurance sector was the biggest sectoral faller with a drop of 1.7 percent, led lower by Italy’s UnipolSai which fell 3.4 percent with traders saying its earnings update and new business plan had no big surprises.

French construction-to-media conglomerate Bouygues rose 2.8 percent after an operating loss and revenues beat forecasts.

Carmaker BMW fell 3.4 percent as the stock traded ex dividend.

The oil sector index fell 0.4 percent after crude oil prices fell as a stronger dollar weighed and Russia warned that a global crude supply overhang could last into next year.

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

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Mike Dolan, Markets Editor EMEA. (Reporting by Danilo Masoni; Additional reporting by Sudip Kar-Gupta in London; editing by John Stonestreet)