European shares extend rally; Vodafone jumps

PARIS, March 6 (Reuters) - European shares inched higher in early trade on Wednesday, adding to the previous session's sharp rally, with Vodafone Group surging on reports of tie-up talks with Verizon Communications.

At 0807 GMT, the FTSEurofirst 300 index of top European shares was up 0.07 percent at 1,189.99 points, after surging 1.8 percent in the previous session and hitting its highest close in 4-1/2 years.

The index was just a few points shy of its February 2011 intraday peak of 1,191.56 points.

"The trend is your friend. Indexes are breaking above big resistance levels and this is creating room on the upside," said Lionel Jardin, head of institutional sales at Assya Capital, in Paris.

"The sentiment is that central banks are going to remain very accomodative for a while, and at the same time companies are in really good shape, with strong cashflows."

Vodafone was up 4.9 percent, boosted by a report the UK telecom group is on talks with U.S. peer Verizon Communications about a potential merger.