* Indexes struggle to break through multi-month highs * Earnings boost lifts Unilever, Novartis * Telecoms fall on outlook worries * Takeover chat boosts United Utilities By David Brett LONDON, Jan 23 European shares stuck to tight trading ranges on Wednesday, hovering near multi-month highs as investors traded cautiously at the start of what could be a mixed earnings season. By 1151 GMT, the FTSEurofirst 300 was down 0.57 of a point at 1,164.92. The index has traded in little more than a 10-point range since Jan 3, and Germany's DAX and the euro zone's blue chip Euro STOXX 50 index have been stuck in a 40-point range. Spain's and Italy's top shares have performed better, suggesting investors are beginning to believe the dangers from Europe's debt crisis are receding. But Peter Garnry, Equity Strategist at Saxo, said he would wait for a pullback before investing fresh money. "The rally over the past few months has been extended with very few setbacks. It almost feels too much and normally that would trigger a minor correction, we think that might be of about 5-10 percent, which is nothing to be scared about and in the longer term if you are long equities you will make money this year," he said. Bullish earnings from numbers from Unilever and Novartis were offset by caution surrounding the outlook for telecom stocks. Unilever , up 2.9 percent, surged to a record high after the Anglo-Dutch consumer goods group reported a rise in sales that beat market forecasts. "They've put in a stellar set of results. I will definitely be a buyer of the stock but not at these levels, where it's looking overbought," says Hartmann Capital trader Basil Petrides. Novartis was not too far behind, up 2.5 percent, after saying it expects sales growth in the mid-single digit percent from 2014. According to Thomson Reuters StarMine, out of 13 percent companies on the S&P 500 index that have reported results so far, 75 percent have met or beaten forecasts. In Europe, only 2 percent of all STOXX Europe 600 firms have announced results, but 86 percent of them have met or beaten expectations. TELECOMS TOUGH CALL But with margins and price-to-earnings ratios close to post-credit-crisis highs, companies need to improve their performances to justify premium ratings. "The bull market has been driven by belief ... that things are going to be better. That needs to be confirmed by an improvement in earnings (and) ... this will take time," a European-based analyst said. Some of the concerns are focused on the telecoms sector , which underperformed the broader market by around 19 percent in 2012. JP Morgan does not expect the sector to repeat that performance but warned that fourth quarter results "could further challenge 2013 expectations. "... Mobile service revenues and other trends further deteriorate, and we believe is far too soon to see tangible reward for fibre investments," it said. Dutch telecoms firm KPN was down 2.0 percent as Citigroup cut its rating to "neutral" from "buy". France Telecom fell 3.2 percent as Bernstein cut its rating to "underperform" from "marketperform", saying it expects the combination of earnings downgrades, negative re-ratings and dividend uncertainty to continue. Telecoms, rank among the lowest sectors in Europe in Thomson Reuters StarMine's Analysts Revisions Model, which ranks stocks based on analysts' revisions of earnings and revenue estimates and changes in their recommendations. M&A chat helped drive United Utilities, with traders citing a report in the Daily Telegraph that the firm could be the target of a bid from a consortium of infrastructure funds. Tui Travel fell 4.4 percent after its parent company Tui AG ruled out an offer for the UK firm.