European shares pressured as strong euro hits earnings

* FTSEurofirst 300 down 0.1 pct but on track for 3rd week of gains

* AXA, Renault, Schneider join list of companies hit by FX

* Unexpectedly weak Ifo underscores growth concerns

By Toni Vorobyova

LONDON, Oct 25 (Reuters) - European shares steadied on Friday after a growing list of companies reported earnings hit by an adverse exchange rate, prompting investors to lock in profits at the end of a third straight week of market gains.

A strong euro hit sales at French insurer AXA and carmaker Renault, while prompting electrical gear maker Schneider Electric to lower its full year forecasts.

The euro has risen to 2-year highs on a trade-weighted basis, with the currency strength making it harder for European exporters to compete on price, as well as reducing the domestic currency value of their foreign earnings.

Weak earnings also weighed on home appliances maker Electrolux and truckmaker Volvo, down 7.5 and 7.0 percent, respectively.

"The weakness of emerging currencies which we experienced in the summer is clearly impacting earnings right now, because you have a lot of guidance downgraded. It's the big issue for this earnings season," said Benoit Peloille, investment strategist at Natixis.

"That's why we continue to push a value strategy oriented on domestic stocks that are more reliant on the euro zone trend rather than on growth stocks which are exposed to emerging countries. These stocks have benefited from premium valuations ... so they are the most in danger."

The FTSEurofirst 300 was down 0.1 percent at 1,285.25 points by 1002 GMT, holding around 10 points below the 5-year highs hit on Tuesday, but still up 0.6 percent on the week.

With the pan-European index already up more than 13 percent since the start of 2013 and in the running for its biggest annual gain four years, investors have been counting on a pick-up in earnings to become the next driver of equity market gains, taking over from central bank stimulus.

However, despite some bright spots, the latest results season suggests the recovery has not yet happened, with some 43 percent of the companies to have reported so far missing earnings expectations, according to StarMine.

Sentiment has also been bruised by expectations that a two-week U.S. government shutdown this month will hit growth in the world's biggest economy, while an unexpected fall in the German Ifo business climate index on Friday cast some doubt about the strength of the recovery in the euro zone.

"We have come quite far (on equity markets) and the earnings are relatively mixed as they are coming out. We are slightly cautious going into the year-end," said Gautam Batra, chief investment officer at Signia Wealth.

"We are looking for a turn in momentum to trim (holdings), and it will be probably across the board ... For us, the focus is very much protecting the gains."