European shares rise on ECB stimulus hopes; Infineon shines

* Pan-European FTSEurofirst 300 index up 0.8 percent

* Infineon (Xetra: 623100 - news) soars after results, dividend beat expectations

* BHP Billiton (NYSE: BBL - news) falls after downgrade

* Volkswagen (Other OTC: VLKAF - news) leads gains by car makers (Adds detail)

By Danilo Masoni and Alistair Smout

MILAN/LONDON, Nov 26 (Reuters) - European shares rose on Thursday, helped by growing expectations of aggressive European Central Bank action next week. A solid quarterly report from chipmaker Infineon and a rebound in metal prices also provided support.

The pan-European FTSEurofirst 300 index was up 0.8 percent at 1,514.53 points after gaining 1.4 percent on Wednesday. The Euro STOXX 50 was up 1.1 percent.

The euro edged towards seven-month lows against the dollar as investors bet that the ECB would ease policy again in December.

"Expectations surrounding the ECB are running very high and this is driving European markets higher, weakening the euro and helping them do better than U.S (Other OTC: UBGXF - news) . stocks," said Marco Vailati, head of research and investment at Italy's Cassa Lombarda. "I think and hope the ECB will not disappoint but I realise that it won't be that easy," he said.

Infineon climbed nearly 14 percent after the chip maker posted quarterly operating results that were higher than expected and promised an increase in revenue for its latest financial year at the high end of analysts' expectations.

"Infineon has proven surprisingly resilient and is executing very well," said Bernd Laux, an analyst at Kepler Cheuvreux, keeping his "Hold" recommendation. "Based on its new guidance, the shares are not expensive any more."

The company also proposes a dividend increase to 0.20 euro a share, also higher than expected.

The bullish update boosted other chipmakers, with STMicro up 5.6 percent and Dialog Semiconductor (Xetra: 927200 - news) up 4.8 percent.

Remy Cointreau (Swiss: RCO.SW - news) fell 2 percent after reporting a 7.3 pct fall in like-for-like current operating profit in the first half, reflecting soft Chinese demand for its premium cognac.

Another drinks company, Royal UNIBREW (LSE: 0R6Z.L - news) , rose 8.4 percent after reporting quarterly results above analysts' expectations and raising its medium-term core profit target.

Abengoa (LSE: 0NUI.L - news) shares slumped for a second day as the renewable-energy firm continued insolvency proceedings. A potential investor backed out of a 350 million-euro deal to recapitalise the company. The stock was down 23 percent, after wiping out half its market value on Wednesday.

Mining stocks were among the top gainers, rising 1 percent, as base metals prices rallied after falling to multi-year lows early in the week.

But BHP Billiton fell 3 percent after JP Morgan downgraded the stock to "underweight" from "neutral" and said it was expecting a 50 percent reduction in its dividend because of further downside risk to copper prices.

Auto stocks were also in demand, with the sector index adding 2.6 percent, benefitting from weakness in the euro.

The sector was also helped by gains in Volkswagen, which rose 3.8 percent and is set for a tenth straight day of gains.

Baader Bank Helvea confirmed its "hold" rating on the stock and said it remained cautious, because of uncertain costs related VW's rigging emissions tests for some of its cars.

Europe bourses in 2015: http://link.reuters.com/pap87v

Asset performance in 2015: http://link.reuters.com/gap87v

Today's European research round-up RCH/EUROPE (Reporting by Danilo Masoni; Editing by Keith Weir)