LONDON, July 1 Reuters French political uncertainty and an EU trade spat with China are casting a shadow over European corporate earnings, investors say, despite forecasts that companies are set to deliver better results.

Secondquarter earnings for companies in the panEuropean STOXX 600 are seen rising 2 and revenues increasing by 1.7, LSEG IBES data shows, in what would be the first quarter of growth since the first three months of 2023.

Investors had been warming to Europe39;s equity markets as the European Central Bank embarked on looser policy and the economic outlook improved, but French President Emmanuel Macron39;s shock decision to call parliamentary elections has sparked doubts.

Concerns about France39;s fiscal discipline under new right or leftwing governments have shaken confidence, as have fears of tax and minimum wage rises under the left.

Analysts have responded by trimming earnings expectations for French bluechip firms and reining in expectations for European shares in the last two weeks.

The STOXX 600 index, which touched a record high on June 7, the last trading day before Macron dissolved parliament, is down 2.5 from that peak. France39;s CAC 40, at its lowest since January, has borne the brunt of the selling.

It could be the typical seasonal pattern where you get some downgrades going into earnings season, but you39;re not getting as positive a signal as you got last quarter, said Citigroup European equity strategist David Groman.

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