European shares fall, weighed by earnings, Ukraine woes

* FTSEurofirst 300 down 0.5 pct; Portugal's PSI down 3.3 pct

* Cement makers lead declines as forex hits results

* U.S. GDP's strength provides no help; focus shifts to Fed

* Traders fear escalation in Russia-Ukraine conflict

By Francesco Canepa

LONDON, July 30 (Reuters) - European shares closed lower on Wednesday, as strong U.S. growth failed to offset some weak earnings reports and concern the conflict between Russia and Ukraine will escalate.

Holcim (Other OTC: HCMLF - news) 's and HeidelbergCement (Other OTC: HDELY - news) 's shares fell 4.8 percent and 2.8 percent respectively, leaving the STOXX Europe 600 constructions and materials index down 1.5 percent.

French electrical-gear maker Schneider Electric, down 4.3 percent, also blamed the depreciation of several currencies against the euro for disappointing sales growth in the first half of the year.

Companies in the STOXX Europe 600 that have reported quarterly results so far have seen their sales drop by an average 1 percent, StarMine data showed.

While stronger currencies in developed Europe played a role in the decline, some strategists were starting to worry about weaker demand in Europe, which is struggling with low growth and inflation.

"It's not so much about the currency, there's no demand from end-customers in Europe," said Claudia Panseri, global equity strategist at Societe Generale (Paris: FR0000130809 - news) . "With prices also falling, I see no growth."

Bucking the trend was French car maker Peugeot (Paris: FR0000121501 - news) , which surged 6 percent after it posted the first positive contribution from its core auto division in three years in the first six months of 2014.

Dutch telecoms group KPN (Amsterdam: KPN.AS - news) rose 4.7 percent after reporting a better-than-expected second-quarter core profit, although it was helped in part by cost cuts.

The pan-European FTSEurofirst 300 index closed 0.5 percent lower at 1,366.52 points after a choppy session.

The index extended losses in the afternoon as NATO said the number of Russian troops and weaponry along the border with Ukraine was increasing to "well over 12,000".

Fighting between Moscow-backed rebels and government troops has intensified since a Malaysian airliner was shot down earlier this month.

"(The threat of) war is the main drag on markets this afternoon," Mike Reuter, a broker at Tradition, said.

French oil major Total (NYSE: TOT - news) fell 4.9 percent after saying that it had stopped buying shares in Russia's Novatek the day of the downing of a Malaysia Airlines flight over Ukraine.

Portugal's PSI 20 fell 3.3 percent, underperforming all major European indexes, as retailer Jeronimo Martins and Banco Espirito Santo each fell more than 10 percent.

Jeronimo Martins is struggling with deflation in its two main markets, Poland and Portugal, and BES fell amid concern it will report a loss later on Wednesday and will require a capital increase.

U.S. GDP FAILS TO COMFORT INVESTORS

European investors failed to benefit from data showing U.S. economic growth accelerated more than expected in the second quarter, partly due to inventories.

The GDP report was released hours before Federal Reserve officials conclude a two-day policy meeting. It could fuel debate on whether the central bank needs to raise interest rates sooner than expected, a move that would affect borrowing costs globally.

"The Federal Reserve was expecting a rebound, and I don't think they are going to be too heavily swayed by these changes," John Clarke, chief investment officer at GHC Capital Markets, said. "My concern about European equities is that investors are discounting too much in terms of European economic recovery."

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

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

Today's European research round-up (Additonal Reporting By Blaise Robinson; Editing by Larry King)