INVESTMENT FOCUS-EM-focused euro stocks may get second wind after Brexit

* European earnings outlook: http://reut.rs/2553txN

* EM-focused stocks outperform: http://reut.rs/2aJk1W2

* Adidas (LSE: 0OLD.L - news) , Carlsberg (LSE: 0AI4.L - news) , Diageo (LSE: DGE.L - news) near record highs

* Optimism about EM consumers underpins investor interest

* Mood on EM brightens:

By Atul Prakash

LONDON, Aug 5 (Reuters) - A rally in European stocks with exposure to emerging markets has driven some share prices close to record highs, but betting against more gains may be premature given the dim prospects of many of their developed market-focused counterparts.

Dismal growth outlooks for the likes of Russia and Brazil soured sentiment in EM-oriented stocks until last year, since when a sharp turnaround in mood has becomes a relative bright spot in an otherwise sluggish backdrop for European corporate earnings.

Based on current forecasts, the region's firms are, on aggregate, on track to report no earnings growth for the fourth year in the past five, according to Thomson Reuters (Dusseldorf: TOC.DU - news) data.

The picture has been further clouded by Britain's vote to leave the European Union, suggesting the outperformance of emerging markets-focused stocks -- Adidas, Diageo (Euronext: DGE.NX - news) and Carlsberg, for instance, trade near record highs -- may have further to run.

"The perception towards Russia in particular and emerging markets in general has changed," said Adrian Fitzpatrick, head of investment dealing at Kames Capital.

"The market, which has a short memory when things are going in the right way, is quite sanguine about the region as the focus has shifted to other issues."

Adidas shares are up 131 percent over the past year, while Carlsberg is up more than 55 percent from last summer's lows.

Shares (Berlin: DI6.BE - news) in Finnish tyre maker Nokian, which makes about a third of its sales in Russia, have surged more than 80 percent from a low hit in 2014. In that year, the toppling of Ukraine's pro-Russian president triggered the biggest row between Moscow and the West since the Cold War, leading to sanctions that hobbled the Russian economy.

The broad STOXX 600, meanwhile, is down more than 15 percent since last August.

That contrast extends to the embattled European banking sector, where shares of EM-focused banks such as HSBC and Standard Chartered (HKSE: 2888.HK - news) have outperformed significantly.

THE EM CONSUMER

"Clients are warming up to emerging markets," said Andrew Garthwaite, head of global equity strategy at Credit Suisse (LSE: 0QP5.L - news) .

Noting reliance on emerging markets was much higher for firms in Europe than in other developed regions, he said he would still recommend clients buying into such firms -- though he cautioned against companies with more than 15 percent of sales generated in China.

The stocks that have stood out are largely focused on consumers as personal spending in emerging markets has held up relatively well as the pace of overall growth has eased. They also pay relatively high dividends.

"Emerging market countries tend to have dynamic economies with young workforces and burgeoning middle classes, which makes for an exciting long-term investment opportunity," said Laith Khalaf, senior analyst at Hargreaves Lansdown (LSE: HL.L - news) ..

"The political background is one of the risks in many emerging economies, but after the euro zone debt crisis and the Brexit vote, let's not pretend that developed markets aren't influenced by political interventions too."

Following the strong run, some analysts say some valuations could have run ahead of fundamentals, particularly in the energy sector.

"The strength in the emerging market space was more driven by external factors than by an improvement in EM fundamentals," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.

"This makes the current rally vulnerable also for Russian assets, especially when the oil price continues to decline, which is not inconceivable given the current oil market glut."

(Editing by Vikram Subhedar and John Stonestreet)