October 15, 2018 / 8:56 AM / a month ago

UPDATE 2-European shares rise cautiously from 22-month low as earnings misses are punished

* European stocks reverse early losses

* Oil & gas shares support gains as crude prices rise

* STOXX 600 up 0.1 percent

* ConvaTec sinks 33 pct after profit warning (Updates prices, adds details)

By Julien Ponthus and Helen Reid

LONDON, Oct 15 (Reuters) - European shares hit their lowest level since December 2016 in early trading after as trade wars, rising U.S. yields, Brexit and the Italy/EU budget row continued to weigh on markets, before recovering modestly to end the day up 0.1 percent.

The pan-European STOXX 600 had last week suffered its biggest drop since February.

Noting that Wall Street had also managed to stage a rebound on Friday, ING analysts said the risks were still significant.

"Just as you shouldn't breathe too big a sigh of relief after earth tremors end, we remain anxious of a market that seems jittery, even against the backdrop of a very strong U.S. economy," they told clients.

European shares have underperformed their American peers since the beginning of the year and analysts believe companies that fail to meet expectations during the third quarter earnings season will be severely punished.

Indeed, early company reports on Monday indicated investors had no patience for below-par results.

Shares in the Spanish supermarket chain Dia sank 40 percent after it issued its third profit warning in 12 months and suspended 2019 dividend payments.

"That a full-year EBITDA shortfall of up to 30 percent should emerge less than three months from year end is worrying enough," wrote Jefferies analysts.

"For this to materialise at a time of worsening leverage profile, historical restatements and drastic changes in leadership will add considerably to investors' concerns on Dia."

British medical technology firm ConvaTec was the worst performer on the STOXX 600, losing a third of its market value after cutting its forecast and announcing its CEO was stepping down.

A profit warning from the British fashion group Superdry sent its shares down 17 percent.

Swedish medical equipment Getinge fell 18 percent after announcing a 200.5 million provision related to surgical mesh product liability claims.

Among the winners was Danish food science firm Chr Hansen , up 4.3 percent after delivering better-than expected results and a strong outlook.

Shares in miner Randgold Resources were also among the top performers, up 5.2 percent, as gold prices hit a near- 12-week high with investors looking for safe havens.

The telecoms sector was the best-performing, up 1.6 percent as investors' search for safer assets drove them into sectors considered "defensive" for their high dividend payouts.

Overall, oil and gas stocks helped support gains, up 0.7 percent as crude prices climbed on geopolitical tensions over the disappearance of Saudi journalist Jamal Khashoggi. (Reporting by Julien Ponthus and Helen Reid; Editing by Kevin Liffey)

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