RBS and Renault knock European shares off five year high

* FTSEurofirst 300 falls 0.2 pct

* RBS (LSE: RBS.L - news) drops 7.5 percent after earnings report

* Renault (TLO: RENA-U.TI - news) dips after partner Nissan cuts outlook

By Alistair Smout

LONDON, Nov 1 (Reuters) - European stock markets eased off five year highs on Friday, after fresh signs of corporate earnings weakness pegged back Royal Bank of Scotland and carmaker Renault.

RBS was the top FTSEurofirst 300 faller after posting a surprise loss, missing profit forecasts by 1 billion pounds ($1.6 billion).

The bank traded down 7.5 percent despite a plan to create an internal "bad bank" that was in line with market expectations.

Renault also dropped on earnings concerns, falling 4.3 percent after its Japanese partner Nissan cut its profit outlook, while UK aircraft parts supplier Meggitt (Frankfurt: MGI.F - news) lost over a 10th of its stock market value after cutting its own revenue guidance.

According to Thomson Reuters StarMine data, 53 percent of companies on the pan-European STOXX 600 index have missed market expectations with their results.

"Investors have taken the recent profit target revisions and earnings misses from the likes of RBS ... as an opportunity to take some profits out of the recent rally," Kash Kamal, research analyst at Sucden Financial, said.

The pan-European FTSEurofirst 300 index closed down 0.3 percent at 1,289.52 points, slipping back from a 5-year closing high of 1,292.73 set in the previous session.

Kevin Lilley, head of European equities at Old Mutual Global Investors, said he was not too concerned by the weak third quarter results. He felt 2014 would better for companies as the European economy gradually recovered from the effects of the region's sovereign debt crisis.

"Companies are missing on the revenue side but they're not doing too badly on the profit side," said Lilley.

"For me, it's still very comfortable. We're beginning to emerge out of recession in Europe and people will have greater confidence in 2014."

Stocks extended losses in afternoon trade, after strong U.S. data reiterated the case for a slowing of U.S. monetary stimulus sooner than had been expected.

"The stronger than expected ISM manufacturing index released earlier today fuelling speculation that the bond buying programme will be reined in sooner rather than later," Kamal said.

"With investors cautious to any change in Fed policy we could see short term moves back towards 1250."