European shares fall as downed plane spurs safe-haven buying

* FTSEurofirst 300 down 0.3 pct

* Geopolitical concern weighs on stocks

* No panic in market as hopes rise for de-escalation

* Ericsson (Xetra: 765913 - news) surges after earnings to provide support

By Alistair Smout

EDINBURGH, July 18 (Reuters) - European stocks fell on Friday, extending losses made late in the previous session after a passenger plane was shot down over eastern Ukraine, stoking tensions between Russia and the West.

The pan-European FTSEurofirst 300 index was down by 0.3 percent at 1,356.36 by 0748 GMT but was off an intraday low hit in early morning trade.

"People in the market are still worried that there will be an escalation in the conflict (following the plane crash)," said Markus Huber, senior sales trader at Peregrine & Black.

"But it's so serious that maybe people will pull back from the conflict now."

The European index had ended Thursday 1 percent lower, following a late sell-off sparked by reports that the Malaysian airliner had been shot down, killing all 298 people on board.

U.S. and Asian stocks slumped overnight while safe-haven gold and bond prices rose after the disaster and as Israel began its ground offensive in Gaza.

Wall Street had its worst day since April.

Broad-based falls on Friday saw all but two sectors on the STOXX Europe 600 in negative territory.

The airliner crash could intensify international pressure to resolve the crisis in Ukraine, which has killed hundreds since protests toppled the Moscow-backed president in Kiev in February and Russia annexed the Crimea a month later.

But uncertainty over how the incident will affect the conflict between the Ukrainian government and separatists could mean investors are reluctant to hold long positions over the weekend in case the situation deteriorates.

"While the market response to the unfortunate air incident was not as bad as many might have expected, with this being week-end and geopolitical risk such an unknown quantity, be prepared for some risk aversion," Mike van Dulken, head of research at Accendo Markets, said in a note.

Losses were mitigated by a number of expectation-beating profit reports, with Sweden's Ericsson, home appliances firm Electrolux (Other OTC: ELUXY - news) and Swedbank all reporting results that beat consensus estimates.

Mobile telecom gear maker Ericsson rose 9 percent, the top FTSEurofirst 300 riser, after sales picked up at its key networks unit thanks to growth in the Middle East, China, the United States and India.

With 12 percent of companies in the DJ Stoxx 600 having reported results so far this earnings season, 73 percent have beaten or met expectations, according to Thomson Reuters StarMine data.

"The market is so politically driven at the moment, which is bad news as it means we neglect fundamentals such as earnings," Huber said.

Global truck maker Volvo was the top faller, down 4.5 percent after posting a smaller than expected rise in profit after a slow rebound in demand in Europe left it with overcapacity.

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today's European research round-up (Editing by Catherine Evans)