London - European shares were on course for their first monthly loss since August on Friday, partly on the back of evidence that company earnings are being hit by the turbulence in emerging markets.

The pan-European FTSEurofirst 300 index was down 0.3 percent at 1,290.15 points in early session trading, putting it on track for a fall of around 2 percent in January, after having risen for the previous four months.

Shares in Electrolux fell 4.5 percent after the Swedish home appliances maker posted a bigger-than-expected drop in quarterly earnings.

Electrolux's earnings were hit by a slump in Brazil, whose economy has had to deal with a fall in the country's currency.

Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said problems in emerging markets would weigh on equity markets for the near term.

“Emerging market volatility is going to be our companion for a while and may have a slightly negative impact on earnings as some companies will have to take currency losses on some of the assets denominated in foreign currencies,” said Gijsels.

Injections of liquidity by major world central banks, coupled with signs of a slow economic recovery in Europe, had driven a European stock market rally in 2013, with the FTSEurofirst 300 rising 16 percent last year.

But traders and strategists have said for that momentum to be maintained, Europe's leading companies need to post strong results at the start of 2014 - and so far, several blue-chip companies have disappointed on that front such as Electrolux on Friday and drinks group Diageo earlier this week.

Many investors with a longer-term view over the whole of 2014 remain positive on European equities this year, saying the stock market should gradually rise over the course of the year as the region's economic recovery slowly strengthens.

But traders such as ACIES Asset Management's Andreas Clenow said now was not the time to go back into the equity market.

“Most likely, the bull market is not over, but for now it looks shaky. I'm taking a very defensive stance in the short-term. We've closed out long positions and raised some cash,” he said. - Reuters