But there may be bright spots - oil producers, car makers and companies exposed to emerging markets could all deliver relatively upbeat third-quarter results over the coming month, according to analysts and investors.

Persistent disappointment on corporate earnings growth has dented the appetite for stocks among investors around the world, who have pulled money from European equity funds for a record 36 straight weeks.

Meanwhile earnings in aggregate have contracted for four of the last five years in Europe and are expected to contract 2 percent this year and this compares with expectations of a 0.4 percent contraction for S&P 500 <0#.SPX> companies, according to Thomson Reuters I/B/E/S Estimates.

For 2017 European earnings are expected to increase by 13 percent, reflecting a tendency for analysts to take an optimistic view which diminishes as the year proceeds.

Financials, along with commodities-related sectors, are expected to be the biggest setback for earnings overall. Europe's worst-performing sector, banks <0#.SX7P> have pulled the STOXX 600 Europe index <.STOXX> down 6.7 percent so far this year.

"The banking sector is probably going to take the most focus and that's going to be driven by things like litigation costs, mostly," Olly Russ, manager of the Liontrust European Income fund, said.

European banks, whose profitability has been battered by relentlessly low interest rates, have been in focus in recent weeks with Deutsche Bank (>> Deutsche Bank AG) shares hitting record lows and continued worries about Italian lenders' bad debts also spooking investors.

Meanwhile, concerns about how British firms will fare as the country negotiates its way out of the European Union have dampened earnings expectations at the more domestically-exposed UK firms.

A spate of profit warnings from the likes of Capita (>> Capita PLC), Mitie (>> Mitie Group PLC), easyJet (>> easyJet plc) and Sports Direct (>> Sports Direct International Plc) have already started to show some of the concerns over the impact of Brexit.

The struggling pound, however, has improved the outlook for large, globally focussed but UK-listed oil producers, pharmaceutical firms and food and beverage companies which earn significant revenues abroad and the 11 percent rise in the FTSE 100 index <.FTSE> since the Brexit vote on June 23 has taken it to record highs.

Firming commodities prices, on the back of stabilising growth in China and emerging markets, have also lifted the mood for mining and metals companies while upbeat German ZEW and Ifo surveys have shown an improvement in both business and economic sentiment in Europe's biggest economy.

The modestly improving global backdrop coupled with commodity prices on the cusp of turning positive year-on-year could see third-quarter earnings beat estimates, Morgan Stanley's European equity strategists said in a note.

Analysts are particularly hopeful for some robust results from Europe's automotive sector after September's stronger sales in China, the world's largest car market.

Likewise oil majors could benefit from a lift in oil prices, which have risen to above $50 a barrel since OPEC said it had made a deal to cut output in September.

"After five years of earnings declines, we think that we are finally approaching the end of Europe's earnings bear-market," analysts at Morgan Stanley said, though warning that stocks are more vulnerable to disappointments following the recent rally.

Morgan Stanley estimates aggregate third-quarter earnings in Europe should contract 4 percent, though with commodity and financial firms stripped out, profits would rise 13.6 percent.

OPTIMISTIC

Looking to next year, analysts currently expect European earnings to grow more than 13 percent, an optimistic projection according to some investors.

"That just isn’t achievable. It would be a struggle to achieve it in a good economic environment, let alone this environment," said Veronika Pechlaner, European equity fund manager at Ashburton, adding that third-quarter results could help take the market down to more healthy levels and reset expectations.

"As people consider the outlook for next year, it could be helpful if the market starts to shave off some of these optimistic numbers for next year,” said Pechlaner.

(Additional reporting by Alistair Smout; Editing by Nigel Stephenson, Greg Mahlich)

By Kit Rees