* FTSEurofirst 300 down 0.3 pct
* Still on track for 3rd week of gains
* AXA, Renault, Schneider join list of companies hit by FX
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 5.6 and 5.3 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."
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.
The FTSEurofirst 300 was down 0.3 percent at 1,281.68 points by 0728 GMY, holding some 10 points below the 5-year highs hit on Tuesday, but still up 0.3 percent on the week.
The correction marked a retreat from overbought territory on the 7-day relative strength indicator (RSI) for the index.
On the flip side, shares in buildings material supplier Saint Gobain rose 3 percent as stabilisation in its European markets and solid demand in other regions offset any negative currency impact.
"Earnings-wise, it's been a very mixed bag. If anyone misses, they get hit at the moment," said Terry Torrison, managing director at Monaco-based McLaren Securities.
"I think we have to have a breather before we go higher again. We're looking overbought in the short-term but I'm still bullish going into the end of the year," he added.