(Updating with detail throughout)

LONDON (AFX) - Leading European exchanges turned flat in early deals, as investors locked in profits following a volatile trading session on Wall Street overnight, and while dealers digested a busy earnings diary, with positive statements from Renault (Nachrichten/Aktienkurs) and ENI (Nachrichten/Aktienkurs) offset by mixed results from Michelin (Nachrichten) and TeliaSonera, (Nachrichten/Aktienkurs) dealers said.

At 8.58 am, the STOXX 50 lost 2.97 points at 3,438.43 while the STOXX 600 shed 0.31 points at 325.1.

In Europe, Michelin shares deflated after posting weaker than expected first half figures, and lowered its full year estimates.

Shares were down 0.14 at 45.26 after the tyre-maker said first half net profit was 276.1 mln eur, down 28 pct from a year earlier on charges associated with closing a plant in Ontario; while operating profit was 485.2 mln eur, down 29 pct, amid surging costs of raw materials.

Both figures were below analysts' estimates. Consensus forecasts showed they expected net profit to fall 19.2 pct to 314 mln eur and EBIT to drop 2.7 pct to 669 mln.

Michelin also lowered its full year margin guidance to 8 pct from previous guidance of 8.8 pct.

Telecom groups were also in focus, with shares in Swedish-Finnish telecoms operator TeliaSonera lower by 1.6 skr to 40.9 skr as the market digested 'in-line' second quarter results, but with disappointing Swedish fixed line operations.

Earlier this morning, the Swedish telecom group reported a 10 pct increase in second quarter underlying EBITDA to 7.928 bln skr, buoyed by improved margins in its mobile operations, the successful implementation of synergies from acquisitions, and higher sales.

The result was above average market forecasts of 7.830 bln skr, as recorded by SME Direkt.

Reacting to the news, UBS reiterated its 'buy' recommendation, saying the results were 'in-line' but noting that the main disappointment was in Swedish fixed operations, with EBITDA down 12 pct compared to consensus estimates.

The broker said these mixed results could leave the stock vulnerable despite the good results in Norway and Finland.

Meanwhile, France Telecom remained one of the main casualties, with the shares bleeding 0.11 eur at 16.25 after the group reported a disappointing outlook yesterday.

Peer Telecom Italia shed 0.017 eur at 2.09 in sympathy, while an upgrade to 'hold' from 'sell' by Dresdner Kleinwort failed to bring buyers to Alcatel, down 0.09 eur at 8.6.

Dresdner Kleinwort said that despite the group's uninspiring results, the target price range of 8.6 eur has remained intact, but said it remains sceptical about the group's ability to generate anything close to double-digit clean returns, and noted that following the initial euphoria in reaction to the Lucent accord, the market now looks sufficiently risk-averse to absorb a prolonged uncertainty.

Media stock Vivendi was another hard hit stock, with shares down 0.31 eur at 26.24 as investors locked in profits after the group posted solid first half results yesterday.

Over on the upside, shares in Renault were one of the early gainers, up 1.05 eur at 85.8 after the group reported consensus beating first half results, with net profit of 1.627 bln eur, down from 2.17 bln a year earlier, but well above the 1.278-1.39 bln expected by analysts.

The car-maker also stuck to its full-year guidance for both sales and operating profit but warned raw materials costs are likely to rise by 350 mln eur during the period.

Nomura Securities reiterated its 'buy' recommendation, noting that a tight rein on costs and a selective sales policy allowed the group to surprise the market on the upside.

Swedish truck and engine-maker peer Scania AB seemed to be on the right track, with the shares putting on 3.5 skr at 310.5 ahead of its second quarter figures due out today.

The group is expected to report a second quarter pretax profit of 2.211 bln skr, up from 1.742 bln skr a year earlier, supported by strong sales of trucks ahead of tougher emission rules, and with the margin improving, a survey of analysts by AFX News and SME Direkt said.

Analysts said the focus will be on truck orders, margin performance, and the outlook for the second half and going forward after strong sales in the first half were caused by customers buying cheaper, old-standard trucks that do not need to comply with forthcoming emissions rules.

Second-quarter sales for the truck maker are seen at 18.579 bln, compared with 16.561 bln in the same period in 2005.

Italian bellwether stock ENI was modestly firmer at the open, up 0.07 eur at 23.91 after posting second quarter net profit up to 2.301 bln eur from 1.898 bln a year earlier, thanks to higher oil prices and an increase in gas sales.

However, the result came in below analysts' expectations.

The oil giant also disclosed plans to pay an interim dividend of 0.60 eur per share.

Oil prices remained firm in early trade on ongoing caution regarding the Middle East conflict as well as pipeline snags at Shell's Nigerian operations, with crude light reaching 74.7 usd per barrel from its closing price of 74.54.

Still on the energy sector, E.ON was another early gainer, with the shares 2.73 eur to the better at 97.48 on press reports Spanish energy sector regulator CNE late yesterday gave E.ON approval to buy Endesa SA, provided it sells certain assets as part of the 26.9 bln eur takeover, with the decision expected to be formally announced today.

Shares in Endesa were suspended pending an announcement, shares last changed hands at 26.22 eur each.

'E.ON must sell Endesa's Asco-I nuclear plant and complete other conditions, according to the ruling made late yesterday evening (by the CNE),' one trader said, adding that the decision should be published later today.

Yesterday, Spains national radio RNE reported the CNE made the decision yesterday morning, but the nine board members met again in the evening to draw up the conditions attached to giving the operation the green light.

Iberdrola shares jumped in sympathy, up 0.39 eur at 27.9 while RWE added 0.32 at 67.75.

Over in the US, investors will be looking at second quarter GDP numbers, expected at 3.1 pct according to consensus figures, down from a previous 5.6 pct in the first quarter; while the market will eagerly await the final July reading of consumer sentiment data, seen unchanged at 83.0.

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