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* FTSEurofirst 300 down 0.2 pct
* Italy's FTSE MIB among worst performing stock indexes
* AB Foods drops as Suedzucker warns on sugar outlook (Updates prices)
By Tricia Wright
LONDON, April 8 (Reuters) - European shares fell for asecond day on Tuesday as investors sold out of some of theyear's top performing regional indexes and stocks on fears theearnings season will prove sobering.
Markets in the euro zone periphery led the losses, withItaly's FTSE MIB index down 1.5 percent in brisktrading volumes. The Milan benchmark has strongly outperformedbroad European indexes since the start of the year.
Among individual stocks, Associated British Foods fell 3.9 percent. Traders cited a read-across to the food andtextile retailer's sugar business from a profit warning byGerman mid-cap sugar producer Suedzucker. Its sharessank more than 20 percent.
The downbeat news, which followed a similar warning inFebruary by British rival Tate & Lyle, fuelled concernsABF might have to also cut guidance, traders said, despitestrength in its clothes retailing arm Primark.
"(ABF) could take a whack from (its) sugar division, whichis about a quarter of its business," said Manoj Ladwa, head of trading at TJM Partners.
"It's had a fantastic run, primarily on the back of Primark,but valuations seem pretty high, and it could potentially warnon profits on the back of this news (from Suedzucker)."
According to Thomson Reuters Starmine, ABF trades at aSmartEstimate Price/EPS (forward 12 months) ratio of 25.9,compared to Tate with 12.7 and Suedzucker with 14.4.
ABF's retreat was among the biggest on the pan-EuropeanFTSEurofirst 300, which closed down 0.2 percent at1,333.28 points.
The index reported its worst daily percentage drop in amonth on Monday as investors took profit on a nine-day rally,fearing the market had got ahead of itself and the upcomingfirst-quarter results would expose fundamental weaknesses.
A stock market surge in 2013 and in part of this year hasleft the MSCI Europe dollar-denominated index trading at 13.9times its expected earnings for the next 12 months, the highestvaluation multiple since 2005, Datastream data showed.
Earnings momentum for European shares has remained negativethroughout the period, with analysts cutting their 12-monthforward estimate for European stocks by 2.5 percent over thepast three months, the data showed.
"The positive catalyst would be if earnings progress fasterthan people are expecting. That doesn't look terribly likely fornow," said Frances Hudson, global thematic strategist atStandard Life Investments.
Euro zone banks, which have risen around 20 percentsince early December on growing bets on a recovery in the eurozone, were also under pressure.
Among sellers was Markus Huber, senior trader at Peregrine &Black, who expected some negative surprises from the sectorduring the earnings season as a result of several investigationsinto market rigging and mounting regulatory pressure to increasetransparency.
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 Francesco Canepa, Alistair Smout andBlaise Robinson; Editing by Alison Williams)
