* FTSEurofirst 300 down 0.1 pct, gains 14 pct in 2 months
* Airbus surges after posting sharp rise in operating profits
* 'Capitulation of shorts' could fuel rally -Mirabaud's Plassard
* European stocks at highest P/E ratio since 2004
By Blaise Robinson
PARIS, Feb 27 (Reuters) - European shares dipped on Friday morning, pausing after their best start to the year since regional benchmarks began in late 1986, while Airbus rallied after posting a sharp rise in operating earnings.
Shares in Airbus were up 6.1 percent, representing a gain in market value of 2.5 billion euros ($2.8 billion), roughly the price of six A380 superjumbos.
Shares in International Airlines Group surged 4.4 percent after the owner of British Airways upgraded its 2015 profit forecast by more than 20 percent, after reporting a 81 percent jump in profit last year as oil prices tumbled.
The 50 percent drop in crude prices since mid-2014 has greatly reduced input costs for airlines overall, as jet fuel accounts for around a third of the sector's operating costs.
Lloyds Banking Group rose 1.2 percent after it said it will pay its first dividend in six years after reporting a rise in profit and improvement in its capital strength.
Bucking the trend, UCB fell 3.5 percent after the Belgian pharmaceutical company profit outlook missed analyst expectations.
About two-thirds into Europe's earnings season, 55 percent of companies have met or beaten analyst forecasts. Fourth-quarter earnings are set to grow 14.9 percent, according to Thomson Reuters I/B/E/S, which would be Europe's best earnings season in 3-1/2 years.
At 0900 GMT, the FTSEurofirst 300 index of top European shares was down 0.1 percent at 1,556.19 points, after hitting a fresh seven-year high earlier. The broader STOXX 600 was also down 0.1 percent.
"Investors are reassured by a stabilisation in the Ukrainian crisis and the return of a relative calm in the euro zone," said Mirabaud Securities senior equity sales trader John Plassard in Geneva.
"The rally in stocks is so strong that we could see a capitulation of the shorts at some point, which would push the market even higher. Clearly some indexes have reached frothy valuation levels, but we're still long in the short term."
European stocks are up 14 percent so far this year, boosted by the prospect of the European Central Bank's quantitative easing programme set to start in March.
The rally has left the STOXX 600 trading at the highest valuation multiple in 11 years, and deep in 'overbought' territory on technical charts.
Despite a nascent recovery in earnings, the STOXX 600 is trading at 16 times expected earnings in the next 12 months, its highest price-to-earnings ratio (P/E) since early 2004 and well above a 10-year average P/E of 11.8.
Europe bourses in 2015: link.reuters.com/pap87v
Asset performance in 2015: link.reuters.com/gap87v
Today's European research round-up (Additional reporting by James Regan; Editing by Tom Heneghan)