European shares fall in brisk volumes, Repsol bucks trend

* FTSEurofirst 300 down 0.6 pct, Euro STOXX 50 down 0.3 pct

* Repsol (Berlin: REP.BE - news) surges on hopes of YPF compensation deal

* Bet on indexes instead of shares - GE's Thebault

* ING IM Chief Investment Officer sees earnings rebound

By Blaise Robinson

PARIS, Nov 26 (Reuters) - European stocks fell in brisk volumes on Tuesday, as corporate profit warnings and lower-than-expected U.S. consumer confidence data spooked investors and kept benchmark indexes within ranges set earlier this month.

Shares in Spanish oil major Repsol bucked the trend, surging 4.3 percent as investors cheered the potential end to a year-long conflict with Argentina over compensation for the nationalisation of Repsol's stake in YPF.

The FTSEurofirst 300 index of top European shares lost 0.6 percent to 1,294.03 points, in volumes that were nearly 15 percent larger than the index's daily average volumes of the past 90 days.

The euro zone's blue-chip Euro STOXX 50 index fell 0.3 percent, to 3,062.62 points.

Following a four-month rally which propelled both the FTSEurofirst 300 and the Euro STOXX 50 to five-year highs, stocks stalled in late October and have moved sideways since.

The market has been capped by mixed macroeconomic data, a raft of lower-than-expected corporate earnings and worries over the outlook for the U.S. Federal Reserve's stimulus measures.

"Asset allocation is becoming tricky, given the current valuation levels. There are a lot of questions about the end of the quantitative easing," said Anne (Shenzhen: 002235.SZ - news) -Laure Frischlander, head of BNY Mellon Asset Management's French operations.

Around Europe, Britain's FTSE 100 index fell 0.9 percent, Germany's DAX index slipped 0.1 percent and France's CAC 40 shed 0.6 percent. Spain's IBEX rose 0.3 percent, boosted by Repsol's gains.

Italian bank Monte dei Paschi (Milan: BMPS.MI - news) di Siena was among the biggest losers, down 5.9 percent after the lender approved a rights issue of up to 3 billion euros ($4 billion) - more than its market value - to win EU approval for a state bailout.

On the earnings front, French spirits group Remy Cointreau became the latest European company to warn about its profit outlook on Tuesday. Its shares tumbled 8.3 percent to near a two-year low in massive volumes.

"It's another red flag about business in China, where Remy Cointreau has a strong exposure," said David Thebault, head of quantitative sales trading at Global Equities in Paris.

"All in all, investors are better off betting on indexes via derivatives or exchange-traded funds than betting on individual shares, to avoid risks of profit warnings."

With Europe's earnings season drawing to an end, results have been disappointing. About half of companies missed profit forecasts and nearly two-thirds have missed revenue forecasts, according to data from Thomson Reuters StarMine.

Despite the grim results, corporate earnings in Europe should rise by about 12 percent in 2014 as the macroeconomic background improves and profit margins expand, said Hans Stoter, chief investment officer at ING IM, which has $201 billion in assets under management.

"The rise in earnings next year will be a nice tailwind for equities, and the argument for investing in equity is stronger than the one for investing in fixed income. The earnings yield is still very attractive," he said.

The earnings yield, used by asset managers, gives the percentage of each euro invested in a stock that was earned by the company, and is often compared with government bond yields.

European stocks currently trade at an earnings yield of 7.5 percent, according to Thomson Reuters Datastream data, while 10-year Bund yields are only 1.7 percent, a gap of nearly 600 basis points. That signals stocks are still very cheap compared with government debt.