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European shares inch up as miners, autos get China boost

* FTSEurofirst 300 up 3.17 points 1,283.16

* Miners, autos boosted by upbeat China data

* Daimler gets Q3 profit boost

* Earnings beats waning, pressure on valuations

* Ericsson, Gemalto fall as Q3 results disappoint

By David Brett

LONDON, Oct 24 (Reuters) - Mining and auto stocks lifted European shares on Thursday after encouraging manufacturing data from big consumer China, but mixed earnings from companies trading on high valuations capped gains.

Mining shares rose 0.6 percent after the flash Markit/HSBC Purchasing Managers Index (PMI) for China hit a seven-month high, although volumes were comparatively lower than in the broader market, suggesting investors were not fully committed to the trade.

Societe Generale analysts sounded a cautious note on the outlook in China, arguing that with growth stabilising after a slowdown policymakers seem to be shifting their focus back to risk management.

"The leadership still intends to delever the economy, which is the main reason behind our call that the secular deceleration trend is far from over," it said.

On the broader mining sector, UBS said in its commodity strategy that it saw upside risks to its house view and consensus on gold and silver in the year ahead.

Its preferred precious metals stocks boasted strong returns and good cost control and included London-listed Fresnillo . Among industrial miners, UBS has a strong preference for low-cost producers with the potential to raise cashflow sharply, namely Rio Tinto and BHP Billiton.

Gains among miners helped the FTSEurofirst 300 rise 3.17 points, or 0.3 percent to 1,283.16 by 1030 GMT, after dipping 0.6 percent dip on Wednesday.

The index has rallied 35 percent since June 2012.

Auto stocks climbed 1.2 percent with most of the gains coming from German car maker Daimler.

Daimler jumped 2.3 percent after its results for the three months through September beat forecasts and it announced full-year profit would meet market expectations.

Nordic banks DNB and SEB, Swiss industrial group ABB and WPP, the world's largest advertising company, also rallied after quarter results.

But after a strong start to the earnings season the percentage of companies beating or meeting analyst estimates has fallen to 53 percent from 63 percent earlier this week, according to Starmine data, which is roughly in line with the last three-quarters.

Mobile telecom gear maker Ericsson (ERICb.ST ) led the technology sector lower, skidding 6.5 percent, and Dutch digital security services provider Gemalto GTO.AS shed 3.2 percent, both hit by disappointing quarterly results.

"Earnings momentum is becoming a concern," Tim Whitehead, strategist at Redmayne-Bentley, said.

"Despite all the fundamental and structural problems European equities have done extremely well, and it could be that they mark time until expectations are met on earnings performance and then you might get a further re-rating."

A strong run of gains has seen the Stoxx 600 re-rate on a price-to-earnings of 13.29 times against a 10-year average of 12 times, according to Datastream, so focus is falling on corporate earnings, which are under pressure to justify the re-rating.

"So far, the year-to-date equity rally remains a multiple expansion story and doubts arise on how sustainable this can be in case earnings revisions do not turn around any time soon," Deutsche Bank said in a note.