Swiss stocks sink for second day after SNB's surprise move

* FTSEurofirst 300 slightly up, trading choppy

* Swiss SMI index down 4.3 pct, hits 13-month low

* Analysts slash profit forecasts for Swiss firms

* 85 pct of sales for Swiss firms coming from abroad

By Blaise Robinson and Francesco Canepa

PARIS, Jan 16 (Reuters) - Swiss stocks sank on Friday, extending the sell-off sparked by the Swiss National Bank's surprise decision to remove a ceiling on the Swiss franc that sent the currency soaring.

Watchmakers Swatch and Richemont - considered the most vulnerable to a higher franc because their products are largely produced in Switzerland but sold abroad - were down 6.2 percent and 6.6 percent respectively, adding to losses on Thursday.

Financial markets were shocked on Thursday by the SNB's surprise move to scrap a three-year-old cap on the value of the franc. A wave of profit warnings from Swiss companies is now expected, and investment banks have started to slash their earnings forecasts for several companies.

"The stronger franc will be a drag on earnings for Swiss multinationals," said Martin Moeller, the head of equities at Geneva-based Union Bancaire Privee.

"The scope of the damage will depend on the exchange rate in the next few quarters, but the negative reaction on the market (this week) is normal given the new exchange rate."

Companies such as big pharma's Novartis (Xetra: 904278 - news) and Roche as well as Adecco (VTX: ADEN.VX - news) , the world's biggest staffing firm by sales, generate more than 95 percent of their sales from abroad, according to Morgan Stanley (Xetra: 885836 - news) .

"We estimate that 85 percent of Swiss company sales come from overseas and many of the large-cap names generate 90-95 percent of their revenues this way," Morgan Stanley analysts wrote.

At 1420 GMT, the Swiss blue-chip index SMI was down 4.3 percent, adding to a 8.7 percent slump on Thursday. The index hit a 13-month low earlier in the session.

Societe Generale (Paris: FR0000130809 - news) strategists warned that dividends paid by Swiss companies might be slashed.

"The dividend yield on these companies is key given that this is a country already with a negative sovereign bond yield," they wrote in a note. "The payout ratio will jump from an already high level - 54 percent - and soon we would expect Swiss companies to talk about dividend cuts."

The pan-European FTSEurofirst 300 index was up 0.3 percent at 1,395.34 points, adding to gains made late on Thursday. Investors decided then that ditching the franc's cap meant the SNB was anticipating a European Central Bank programme to buy government bonds, which should support euro zone equities.

A number of fund managers and traders felt the market had by now mostly priced in the introduction of such a quantitative easing programme by the ECB at its policy meeting next week.

"QE (speculation) has been around for so long that I think it will be a 'buy the rumour and sell the announcement'," said Markus Huber, a trader at Peregrine & Black.

Greek shares lagged on Friday, with Athens's benchmark down 2 percent. Two major Greek lenders have applied to tap the national central bank's emergency funding a year after ending their reliance on it, bankers said on Friday, as Greeks withdraw cash before a snap election on Jan. 25.

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

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

Today's European research round-up

(Editing by Larry King)