European shares rally after surprise BoJ easing

* FTSEurofirst 300 up 1.3 pct, Euro STOXX 50 up 1.7 pct

* Unexpectedly strong earnings season also lift sentiment

By Blaise Robinson

PARIS, Oct 31 (Reuters) - European shares surged in early trade on Friday, tracking sharp gains in Tokyo after the Bank of Japan surprised global financial markets by easing policy further.

At 0925 GMT, the FTSEurofirst 300 index of top European shares was up 1.3 percent at 1,345.04 points, extending its sharp two-week rally and tracking the Nikkei's 4.8 percent jump on Friday.

The Bank of Japan said it will increase the pace at which it expands base money to about 80 trillion yen per year, up from a previous target of 60-70 trillion yen. It also said it would boost its purchases of government debt by about 30 trillion yen and extend the average duration of JGB holdings to around 10 years, and triple its purchases of exchange-traded funds and Japan real estate investment trusts.

The jolt from the BOJ, which had been expected to maintain its level of asset purchases, came as the Japanese government signalled its readiness to ramp up spending to boost the economy and as the state pension fund, the world's largest, was set to increase purchases of domestic and foreign stocks.

"There's euphoria in markets following the BoJ news. It will help offset the end of the Fed's QE, and also shows how determined central banks are in their fight against deflation," Saxo Bank trader Pierre Martin said.

"Add to that the fact that European earnings are surprisingly strong, much better than what the market had feared. The lower euro is starting to positively impact earnings."

BNP Paribas (Xetra: 887771 - news) featured among the top blue-chip gainers, up 3 percent after France's No. 1 bank posted better-than-expected results, as gains in fixed income trading and in international retail offset a lacklustre economic environment in its core European markets.

Anheuser-Busch InBev bucked the trend, losing 2.6 percent after the world's largest beer maker reported a lower-than-expected increase of earnings in the third quarter as U.S. wholesalers cut inventories and Brazil was stagnant after the soccer World Cup.

Finnish winter tyre specialist Nokian Renkaat (Other OTC: NKRKY - news) dropped 7 percent after warning its full-year operating profit could be 22 percent lower than in the previous year due to dropping sales in Russia.

So far in Europe's earnings season, about 60 percent of companies have exceeded analyst estimates, well above the average seen since 2011 of 48 percent of European companies beating the forecasts, according to Thomson Reuters I/B/E/S data. Third-quarter earnings are expected to grow 10.7 percent.

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 John Stonestreet, Crispian Balmer)