European shares inch up, earnings help lift sentiment

* FTSEurofirst 300 up 0.1 pct, adds to rebound

* ABB (NYSE: ABB - news) , Husqvarna (Other OTC: HSQVY - news) rally after positive results

* Heineken (Other OTC: HEINY - news) dips after posting lower-than-expected sales

By Blaise Robinson

PARIS, Oct 22 (Reuters) - European shares inched higher in early trading on Wednesday, extending the previous session's sharp gains, with a raft of positive corporate results from companies including ABB and Husqvarna lifting sentiment.

Shares (Berlin: DI6.BE - news) in Swiss engineering group ABB were the top gainers among European blue-chips, gaining 2.7 percent after posting a bigger-than-expected rise in orders, helped by demand from the oil and gas industries.

Outdoor equipment maker Husqvarna also reported a larger-than-expected rise in earnings, sending its shares surging 6.2 percent.

At 0757 GMT, the FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,300.64 points.

The index rose 2.1 percent on Tuesday after sources told Reuters the European Central Bank was considering buying corporate bonds to revive the region's economy - a step that would help banks free up more of their balance sheets for lending.

The index's rebound that started late last week followed a 14 percent pull-back triggered in mid-September and fuelled in part by a rapid deterioration in Germany's macro data.

"The recent correction in stocks was healthy. Europe's valuation ratios are back at levels that match the trend in earnings growth," said Francois Chevallier, strategist at Banque Leonardo.

"Now (NYSE: DNOW - news) the focus will be on Europe's PMIs. As long as the composite PMI remains above 50, it's difficult to imagine that the correction in shares could drag on."

The euro zone composite PMI, due on Thursday, is expected at 51.7, according to a Reuters survey of economists, down from 52 in September but still above the key 50 threshold dividing growth from contraction.

Shares in aluminium producer Norsk Hydro (LSE: NHY.L - news) added 1.7 percent on Wednesday after posting third-quarter earnings above expectations and predicting the sector's first supply deficit since the start of the global financial crisis.

Heineken bucked the trend, losing 1.2 percent after the world's third largest brewer reported lower-than-expected beer sales in the third quarter.

Shares in PSA Peugeot Citroen gained 2.5 percent after the automaker lifted its 2014 European auto market growth forecast to 4-5 percent from 3 percent previously.

So far in Europe's earnings season, 9 percent of STOXX 600 companies have reported results, of which 65 percent have met or beaten profit forecasts, according to data from Thomson Reuters StarMine.

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

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

Today's European research round-up

(Editing by Andrew Heavens)