UPDATE 2-European shares nudge higher as L'Oreal outweighs bank earnings upset

* L'Oreal jumps on quarterly revenue beat

* Deutsche Bank, Santander pressure banks

* Fiat Chrysler confirms deal talks with PSA

* Eyes on Federal Reserve meeting (Updates to close, adds comments)

By Shreyashi Sanyal and Agamoni Ghosh

Oct 30 (Reuters) - European shares eked out gains on Wednesday, buoyed by upbeat results from L'Oreal which defied Chinese slowdown fears, although weak earnings from some of the bloc's biggest lenders such as Deutsche Bank and Santander kept a lid on gains.

The pan-European STOXX 600 index was up 0.1%, with a 1.5% rise in the personal & household goods sector leading gains.

Providing the biggest boost to the sector was L'Oreal's 7.6% jump, after the Lancome owner beat quarterly revenue forecasts aided by robust demand across Asia and especially in mainland China.

Expectations had been low going into the European corporate earnings season, and after three weeks the overall picture has proved better than expected, with most companies modestly beating estimates.

"We are almost half way through these earnings and growth seems to have been slightly ahead of forecast. Overall it's been quite positive for Europe," said Martin Todd, portfolio manager at Hermes Investment Management.

Disappointing results from some of the Europe's top lenders, pushed banks 1.9% lower, clocking the biggest decline among the major sub-sectors.

Deutsche Bank fell 8%, as it reported a loss for the second consecutive quarter due to the costs of its wide-ranging global restructuring. The bank also pressured Frankfurt shares, which dropped 0.2%.

Spanish stocks lost 1.2%, lagging the most across major country indexes, hurt by a 4.1% slide in Santander shares.

The euro zone's biggest lender said net profit fell 75% due to one-off charges in the UK.

Another disappointment was Swiss lender Credit Suisse , which shed 2.6% after issuing a cautious 2020 outlook.

Market participants took heart from a warmer tone around U.S.-China trade relations after the White House said the Trump administration still expects to sign an initial trade agreement with China next month despite the cancellation of the APEC summit in Chile where officials had hoped to finalize the pact.

All eyes are now on the U.S. Federal Reserve's decision on interest rates at 1800 GMT, with a cut in borrowing costs for the third time this year almost certain.

CAR TIE-UP EXCITEMENT

Italian-American carmaker Fiat Chrysler confirmed it was in merger talks with French rival PSA on a deal that would reshape the global industry.

Shares of both companies rose 9.5% and 4.5% respectively, with Peugeot hitting an 11-year high. Shares in another French carmaker, Renault, which was in talks with Fiat earlier this year about a similar deal, slid 4%.

"Consolidation would make sense, where in you combine R&D budget, save on raw materials and get some benefits of scale from production," said Todd.

Among other stocks, Italian tyre-maker Pirelli slumped 10.7%, to the bottom of STOXX 600, after lowering its guidance on operating profit margin and cash flow, and as it said it would delay the presentation of its new business plan in a worsening market scenario. (Reporting by Shreyashi Sanyal in Bengaluru; Additional reporting by Agamoni Ghosh and Lisa Pauline Mattackal; Editing by Arun Koyyur, Patrick Graham and Alexandra Hudson)