Ericsson leads European shares lower after earnings miss

* FTSEurofirst 300 down 0.4 percent

* Ericsson (Xetra: ERCA.DE - news) falls after earnings miss

* Primark gives Associated British Foods (LSE: ABF.L - news) a lift

* French, German PMIs point to diverging economies (Updates prices, adds quote, detail)

By Alistair Smout

LONDON, April 23 (Reuters) - European shares fell on Wednesday, retracing some of the previous session's strong gains as investors responded to weak earnings from Ericsson and mixed data out of the euro zone.

Shares in the Swedish mobile telecom equipment maker fell 4.9 percent, trimming the most points off of the FTSEurofirst 300, after missing first-quarter sales and profit forecasts on weak trading in North America.

"Numbers look a little light given the sales miss, but with margins improving and costs seemingly under control, I'm surprised the stock is down the thick end of 6 percent," Matt Basi, senior sales trader at CMC Markets said, noting that guidance for second quarter sales was bullish.

In all, earnings news was mixed, continuing a theme of the season so far where 53 percent of STOXX Europe 600 companies that have reported results have beaten or met expectations.

The top riser was Associated British Foods, which surged 9.1 percent after it met forecasts, gave a bullish outlook for full-year profits and got a boost from its Primark clothing business.

Following a rally since mid-2012, investors are looking for profits to rebound to support elevated prices, with valuations at their highest since 2005 on the STOXX 600.

"Earnings has to be the major driver. Generally the market is quite wary of this reliance on earnings growth this year, and it could be quite volatile until the second half of the year," said Veronika Pechlaner, who helps manage $13 billion of assets at Ashburton Investments.

The pan-European FTSEurofirst 300 was down 0.4 percent at 1,341.57 at 1015 GMT, after surging 1.3 percent on Tuesday.

French blue-chip shares underperformed their German counterparts on Wednesday after survey data showed the recovery in France is still weaker than the euro zone's biggest economy.

France's CAC 40 index fell 0.5 percent after Purchasing Managers Index (PMI) data for the country showed waning momentum in its fragile economic recovery.

France's manufacturing and services figures came in slightly below expectations, albeit still in expansion territory.

By contrast, survey data from Germany came in ahead of expectations, posting its 12th straight month of expansion.

Germany's DAX outperformed slightly, easing just 0.3 percent.

"The gap (NYSE: GPS - news) between France and Germany is clearly widening," IG analyst David Madden said.

"France has seen some relatively strong figures in the last couple of months, which have started to turn opinion slightly. But today's soft figures, coming in below expectations ... just shows you how fragile the French economy really is."

Euro zone composite PMI data came in slightly ahead of expectations, starting the second quarter on its strongest footing for nearly three years.

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 Janet Lawrence)