* FTSEurofirst 300 up 0.4 pct, reverses two-day retreat
* Strong earnings in Royal Dutch Shell lifts oils
* Investors shun big bets ahead of Fed meeting next week
By Harpreet Bhal
LONDON, Oct 28 (Reuters) - European shares rose on Thursday,
as a flurry of upbeat corporate earnings helped bolster positive
sentiment for equities, more than offsetting falls in chemical
firms after Solvay <SOLB.BR> dropped on weak results.
The pan-European FTSEurofirst 300 <> index of top
shares closed 0.4 percent higher at 1,085.87 points, after
falling 0.8 percent to a two-week closing low in the previous
session.
Oil and gas companies were among the biggest gainers, with
heavyweight Royal Dutch Shell <RDSa.L> rising 0.5 percent after
Europe's largest oil company by market value beat analysts
forecasts to posted higher third-quarter profits.
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BP <BP.L>, which reports earnings on Tuesday, added 0.9
percent while Repsol <REP.MC> gained 1.8 percent, with a rise in
crude prices <CLc1> to above $82 a barrel also helping underpin
gains in the sector.
"This is the sixth earnings season where the surprises have
by far outweighed the non-surprises and this is very good news
for the equity market," said Lothar Mentel, chief investment
officer at Octopus Investments.
France Telecom <FTE.PA> rose 3.1 percent after posting
forecast-beating results and confirming its outlook, fuelling
recent enthusiasm for telecom shares -- one of the sectors
investors had shunned for most of the year.
Deutsche Telecom <DTEGn.DE>, Vodafone <VOD.L> and Telenor
<TEL.OL> rose 1.6 to 3 percent.
On the downside, Belgian chemicals company Solvay fell 5.4
percent, pressured by a large impairment charge and
disappointing earnings.
Within the sector, Bayer <BAYGn.DE> shed 1.6 percent as
looming damages to U.S. rice farmers tarnished the firm's
forecast-beating third-quarter underlying earnings.
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QE SPECULATION PRESISTS
The FTSEurofirst 300 index has gained 2.4 percent so far
this month as expectations grow that the U.S. Federal Reserve
will pump more money into the economy to spur growth. The STOXX
Europe 600 basic resources index <.SXPP> is up 5.3 percent as
quantitative easing speculation puts pressure on the dollar and
boosted metal prices.
Renewed selling pressure for the dollar helped mining shares
push higher on Thursday as metals prices rose across the board.
Anglo American <AAL.L>, Rio Tinto <RIO.L> and Antofagasta
<ANTO.L> rose 1.3 to 2.1 percent.
The VDAX-NEW volatility index <.V1XI>, one of Europe's main
barometers of investor anxiety, was down 3.1 percent on
Thursday. It hit a three-week high in the previous session as
investors shunned risky assets on rising doubts about how
aggressive the Fed is likely to be on quantitative easing (QE)
when it meets next week.
"We're a bit stuck in a range on both the euro/dollar and
European stocks ahead of the Fed's meeting next week. The market
swings on speculation over how big QE2 will be, but we don't see
big positions taken," said Harry Sebag, head of sales trading at
Saxo Banque, in Paris.
Across Europe, Britain's FTSE 100 <>, Germany's DAX
<> and France's CAC 40 <> added 0.4 to 0.6 percent
(Additional reporting by Blaise Robinson in Paris; Editing by
Jon Loades-Carter)
