* FTSEurofirst 300 up 0.5, Euro STOXX 50 up 0.5 pct
* VW leads rally in the auto sector
* Orkla, Next top risers list after earnings beats
* Fed seen confirming delay to tapering after market close
LONDON, Oct 30 (Reuters) - European shares rose to five-year highs on Wednesday, lifted by a batch of solid earnings reports from carmaker Volkswagen, retailer Next and Norwegian conglomerate Orkla among others.
Traders said appetite for shares was also supported by expectations that the U.S. Federal Reserve will give credence to expectations it will delay a reduction of its equity-friendly monetary stimulus programme when it releases a statement at 1800 GMT after a two-day meeting.
Volkswagen, Next and Orkla were the top risers on the pan-European FTSEurofirst 300 index after reporting results that were either in line or better than expected, adding to the generally positive tone of the European earnings season so far.
Around 53 percent of STOXX Europe 600 companies have met or beaten expectations so far this quarter.
While this is roughly in line with the average over the last few quarters and analysts are still cutting their profit estimates, such downgrades are beginning to slow for every sector after a grim six months, a sign the market is becoming less bearish.
"People had been extrapolating disappointment earlier on in the year to this earnings season," Derek Hammond, global head of corporate marketing and equity capital markets liaison at Societe Generale, said.
"That has allowed us therefore to receive the news coming through quite well."
The pan-European the FTSEurofirst 300 was up 0.5 percent at 1,294.64 points, having hit a five-year high at 1,296.37 points earlier in the session. The Euro STOXX 50 was up 0.5 percent at 3,064.37, a high not seen since early 2011.
A prime example of a stock on which the market had been bearishly positioned was Volkswagen, which rose 4.3 percent after unveiling record sales at premium brands Audi and Porsche and confounding heavy market bets for a weak quarterly report.
The proportion of VW shares out on loan, a gauge of negative bets by short sellers, had risen to 11.6 percent earlier this week from 8.4 percent in mid-August, Markit data showed, as the stock fell 7 percent and lagged a rising market.
Some of these short sellers, who borrow a security and sell it hoping they would be able to buy it back more cheaply before returning it to the lender, were rushing to close those positions after the report for fear of losing more as the stock rises, traders said.
A Reuters poll showed a majority of U.S. primary dealers believed that the recent government shutdown and standoff over raising the U.S. debt ceiling had significantly impacted the timing of stimulus reduction by the Fed.
"Rhetoric out of the Fed could be that policy will be easier for longer so if anything there could be a slight dovish surprise," Stewart Richardson, chief investment officer at RMG Wealth management, said, estimating that equity markets could potentially rise a further one percent on the back of a dovish Fed statement.