European shares edge lower on caution before ECB, U.S. data

LONDON, Nov 7 (Reuters) - European shares edged lower on Thursday, with investors trading cautiously before a European Central Bank rate decision and major data releases that have the potential to set the stock market's direction in the near term.

The ECB is likely to leave interest rates at a record low at 1245 GMT, though there is an outside chance of a cut after surprisingly weak euro zone inflation data. The Bank of England also holds a policy meeting later in the day.

The U.S. July-September GDP data, due at 1330 GMT, and Friday's nonfarm payrolls report for October will be scrutinised for insight into the economic effects of last month's government shutdown and the timing of the Federal Reserve's eventual move to trim its stimulus.

At 0809 GMT, the pan-European FTSEurofirst 300 index was down 0.1 percent at 1,294.83 points after setting a new five-year of 1,300.18 points in the previous session. The index has climbed more than 14 percent so far this year.

Analysts stayed positive on the market's medium term outlook.

"What is sure is that the loose global monetary policy will stay in place for at least another year. With stocks being not overly expensive at the moment and provided that economic growth doesn't falter, stocks can only go higher," Koen De Leus, senior economist at KBC, said.

Thursday is a busy day for earnings, with nearly 200 European companies announcing results. Commerzbank (TLO: CB-U.TI - news) rose 6.4 percent to the top of the FTSEurofirst 300 gainers' list after it posted a 15 percent rise in quarterly net profit.

Sixty-four percent of firms on the STOXX Europe 600 have reported results so far, of which 49 percent have met or beaten earning expectations, but only 34 percent have reported above forecast revenues, StarMine data showed.