LONDON, Feb 28 (Reuters) - European shares edged higher early on Friday after falling for three days, with expectations that a further drop in euro zone inflation may prompt the European Central Bank to ease policy further helping cyclical stocks.
Figures due at 1000 GMT are likely to show inflation in the currency bloc falling to 0.7 percent in February from 0.8 percent in the previous month, according to a Reuters survey, but some analysts expected an even lower reading of 0.6 percent.
One-third of economists polled by Reuters have pencilled in a cut in the ECB's refinancing rate from the current 0.25 percent at its March 6 meeting.
At 0812 GMT, the FTSEurofirst 300 index was up 0.2 percent at 1,348.35 points, supported by the insurance, energy and technology sectors. The index headed for its best month since July last year, however some poor company earnings and Ukraine tensions kept gains under check, traders said.
Bayer, Germany's largest drugmaker, fell 1 percent after posting a 3.1 percent decline in adjusted core earnings, while Austrian lender Erste Group dropped 7.5 percent after proposing to halve its dividend.