Europe shares fall as China woes overshadow Q2 earnings

* FTSEurofirst 300 down 1.3 pct

* Valeo (Paris: FR0000130338 - news) sinks 3.7 pct despite guidance upgrade

* Ifo indicator slightly ahead of forecasts

* Mining-sector rebound supports UK stocks

* JPMorgan (LSE: JPIU.L - news) stays overweight Europe equities

By Lionel Laurent

LONDON, July 27 (Reuters) - European equities started the week on a downbeat note, heading for their fifth straight daily fall, with worries over China's growth prospects overshadowing some forecast-beating corporate results.

Although a slightly better-than-expected July reading from the German IFO business climate index helped ease some of the sell-off, market tremors rippled through the region after Chinese stocks suffered their biggest one-day loss in eight years and broader Asian markets fell more than 1 percent.

The FTSEurofirst 300 index was down 1.3 percent at 0807 GMT, with benchmark indexes in Paris and Frankfurt broadly in line. UK stocks outperformed slightly, with the battered mining sector staging a rebound after a volatile week despite metals prices languishing near multi-year lows.

"Most of the fall is coming from China...European markets are getting hit," said Markus Huber, trader at brokerage Peregrine & Black.

"I think a lot of people have the view that China is going to continue to slow down and that slowdown is not really priced into European markets at the moment."

JPMorgan strategists meanwhile said they were staying overweight euro-zone equities. "Improving (economic) fundamentals are likely to take centre stage again," they wrote in a note to clients.

Shares (Berlin: DI6.BE - news) of Swiss bank UBS (NYSEArca: FBGX - news) saw its shares fall 1.5 percent despite reporting a forecast-beating set of quarterly profits. French car parts maker Valeo also fell more than 3 percent despite raising its profit outlook and playing down the impact of a Chinese market slowdown.

Dutch company Philips (Amsterdam: PHIA.AS - news) was a top performer after a strong quarter, with its shares rising more than 3 percent. The company's chief executive warned however that China was "really slowing down".

Reckitt Benckiser (Xetra: A0M1W6 - news) also rose after increasing annual revenue and margin targets. The firm said the improvement was broad-based by geography, consumer health and hygiene led, and aided by a favourable flu season.

Theme-park operator Merlin Entertainment suffered its worst one-day fall ever after warning on annual profits, following the temporary closure of its Alton Towers theme park after a roller-coaster crash in June.

And Fiat Chrysler Automobiles dropped more than 2 percent after the U.S. auto safety watchdog announced on Sunday a record $105 million in fines against the carmaker over lapses in safety recalls involving millions of vehicles.

Europe bourses in 2015: http://link.reuters.com/pap87v

Asset performance in 2015: http://link.reuters.com/gap87v

Today's European research round-up

(Editing by Dominic Evans)