Europe shares rise but Fed's tougher tone limit gains

* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 up 0.1 pct

* Fed ends QE, which has been strong support for stocks

* Alcatel (Paris: FR0000130007 - news) shares rise in short covering rally

By Blaise Robinson

PARIS, Oct 30 (Reuters) - European stocks were slightly higher in afternoon trading following a choppy session, taking a breather from a sharp two-week rally after the U.S. Federal Reserve sounded less dovish on policy at the end of its six-year bond-buying programme.

Company results helped lift sentiment, with Renault up 3.4 percent after the automaker posted a rise in third-quarter revenue and upgraded its European auto market growth forecast for the full year.

Dutch chip equipment maker ASM International surged 13 percent after reporting strong orders and posting quarterly results that traders said were above analyst forecast, in a sharp contrast with a recent raft of disappointing results and outlooks in the tech sector.

Alcatel-Lucent surged 15 percent after the telecoms gear maker said it squeezed out more costs to improve its gross profit margin to a better-than-expected 34 percent, sending hedge fund short sellers scrambling to unwind negative bets on the stock.

According to data from Markit (NasdaqGS: MRKT - news) , 11 percent of Alcatel's shares are out on loan, making it one of the most shorted stocks in Europe.

So far in Europe's earnings season, 36 percent companies have reported results, of which 67 percent managed to meet or beat profit forecasts, and 59 percent met or beat revenue forecasts, according to Thomson Reuters StarMine data.

In absolute terms, profits are up 7.1 percent, while revenues are up 0.1 percent, highlighting the fact that Europe's earnings rebound has mostly been coming from cost cutting and lower financing costs.

At 1523 GMT, the FTSEurofirst 300 index of top European shares was up 0.2 percent at 1,323.01 points, after rising nearly 9 percent since a 13-month low hit on Oct. 16.

As expected, the U.S. central bank on Wednesday ended its stimulative quantitative easing scheme, but a relatively hawkish tone to the accompanying statement prompted investors to rethink the consensus that the first U.S. interest rate hike would be late in 2015.

"This is a key step for the Fed, and despite market jitters in the short-term, it's a necessary move as the U.S. economy is in a pretty good shape," said Jeanne Asseraf-Bitton, head of global cross-asset research, at Lyxor Asset Management.

"The global economy doesn't need more liquidity at this point, it needs economic growth."

The Fed's bond-buying programme has been strongly supportive of risky assets such as equity markets worldwide in the past two years, with the FTSEurofirst 300 up about 40 percent since mid-2012.

European stock markets seen as the most risky took a beating on Thursday, with Spain's IBEX 0.6 percent lower, Portugal's PSI 20 down 1.6 percent and Greece's ATG down 2.8 percent.

"The biggest risks for us are in Europe. That's where the tensions are. Germany is slowing down, and the ECB has still to deliver," said Cyriaque Dailland, fund manager at Paris-based Convictions Asset Management.

The European Central Bank said on Thursday it had chosen Deutsche Bank (Xetra: 514000 - news) , ING, State Street and Amundi to help carry out purchases of securitised private debt, which it expects will start in November as a key part of its stimulus measures to stave off deflation.

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today's European research round-up

(Additional reporting by Alexandre Boksenbaum-Granier; Editing by Emelia Sithole-Matarise and Raissa Kasolowsky)