Profits at European companies are trailing analyst estimates bythe most in at least five years, dragged down by manufacturingshares that had been forecast to lead a rally in the second half ofthe year.

About 53 percent of companies in the Stoxx Europe 600 Index thathave reported earnings since July 11 missed analysts' projections.That's the most in data compiled by Bloomberg since 2006. Thebenchmark gauge lost 3.1 percent in the period, the largest declineto start an earnings season since April 2010.

Investors have been relying on manufacturers in Germany andScandinavia to buoy stocks after Europe's debt crisis forced Greeceto accept a second bailout and cut projections for bank earnings.As commodities costs rise and currencies in Switzerland and theNordic region strengthen, companies from Atlas Copco AB inStockholm to Paris-based PSA Peugeot Citroen and Ludwigshafen,Germany-based BASF SE have disappointed, sending their shares downmore than 5 percent.

“We were coming into an earnings season where expectations werequite high,” said Ben Ritchie, an investment manager at AberdeenAsset Management in London, which oversees $290 billion. “When youlook into financials, results have been weak but in line withestimates. Investors have been more optimistic about certain areaswithin the industrial space and where they have disappointed,shares have reacted strongly.”

Bloomberg