European shares fall as downed plane revives Ukraine worries

* FTSEurofirst 300 down 0.4 pct, trims gains for the week

* Investors trim exposure after plane is downed over Ukraine

* No market panic on hopes international pressure will help end crisis

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

By Francesco Canepa

LONDON, July 18 (Reuters) - European shares fell on Friday as the shooting down of a passenger plane over Ukraine stoked tensions between Russia and the West and sapped appetite for assets which depend on economic growth.

Uncertainty over how the incident will affect the conflict between the Ukrainian government and separatists led many investors to close their long positions ahead of the weekend in case the situation deteriorates.

But selling pressure was moderate and volatility low as the loss of the Malaysian airliner with 298 people aboard was also seen as intensifying international pressure to resolve the worst crisis between Russia and the West since the Cold War.

"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."

Fighting between Kiev and pro-Russian separatists has killed hundreds in Ukraine since protests toppled its Moscow-backed president in February and Russia annexed the Crimea.

The pan-European FTSEurofirst 300 index was down by 0.4 percent at 1,357.47 by 1038 GMT, taking its drop over the past two days to 1.4 percent and leaving it 0.4 percent higher on the week.

Broad-based falls on Friday saw all but one sector on the STOXX Europe 600 in negative territory, although declines were modest at between 0.1 percent and 1.1 percent.

The Euro STOXX Volatility index, which measures the price of options on euro zone blue-chips, effectively gauging investors' fears of future losses, edged 0.7 percent lower after hitting a two-month high earlier in the session.

SWEDISH SUPPORT

Losses were mitigated by a number of strong profit reports from Sweden, with mobile telecom gear maker Ericsson , home appliances firm Electrolux (Other OTC: ELUXY - news) and Swedbank (Other OTC: SWDBF - news) all reporting expectation-beating results.

Ericsson rose 8.1 percent, leading up peers Alcatel Lucent and Nokia, as its results showed sales picked up at its key networks unit thanks to growth in the Middle East, China, the United States and India.

"Ericsson's sales in the U.S. were very resilient," Kepler Cheuvreux analyst Sebastien Sztabowicz said, flagging a positive readacross for Alcatel (Paris: FR0000130007 - news) ahead of its own quarterly results.

"The Chinese business is picking up - it is well known that the gross margin is lower (there) than in the rest of the world due to competition but if you look at the gross margin for the group, it shows they had very good business elsewhere."

With 12 percent of companies in the Europe 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 4.6 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 (Additional reporting by Alistair Smout; Editing by Catherine Evans)