UPDATE 1-ING helps European shares set 5-yr high after results
* FTSEurofirst 300 up 0.4 pct, sets fresh 5-yr high
Earnings beats for ING, Adecco give new momentum to rally
* Shares later trim gains as traders fret about ECB policy
By Francesco Canepa
LONDON, Nov 6 (Reuters) - European shares hit five-year highs on Wednesday after estimate-beating results from financial conglomerate ING and staffing firm Adecco gave fresh impetus to a largely stimulus-driven equity rally.
Main indexes trimmed gains in late trade, however, after a Market News report dampened market bets for a European Central Bank rate cut on Thursday, which would help exporters.
Results from Dutch banking and insurance group ING and Adecco, the world's No. 1 staffing agency, beat forecasts, sending their shares up 3.5. percent and 3.6 percent, respectively.
Other gainers included French cement major Lafarge , which confirmed debt reduction targets, and power and engineering group Alstom after it said it would cut costs further and would not need fresh capital.
The stocks were among the top risers on the pan-European FTSEurofirst 300 index, which closed 0.4 percent higher at 1,296.58 points after hitting a fresh five-year of 1,300 points earlier in the session.
The reports brightened a so-far dull earnings season, which has seen 49 percent of companies in the STOXX Europe 600 index miss consensus expectations, a greater proportion than in recent quarters, Thomson Reuters StarMine data showed.
However, the pace of analyst downgrades has slowed, showing that the market is becoming less bearish about future earnings, Datastream data showed.
"The environment is improving and therefore the expectation is that earnings will improve considerably going forward," said Lorne Baring, managing director of wealth management firm B Capital, who has long positions on Germany's Dax, Britain's FTSE and France's Cac 40 indexes.
Baring said he did not expect the ECB to cut rates on Thursday but he reckoned dovish rhetoric from president Mario Draghi was likely to drive down the euro after recent tame inflation data.
European stocks have been rallying over the past four weeks, boosted in part by expectations that both euro zone and U.S. monetary policy will remain accommodative for some time.
Andrew Milligan, head of global strategy at Standard Life Investments, said the market was trying to balance mixed global economic data with the prospect of further quantitative easing from the Federal Reserve, which has diluted returns in alternative asset classes and boosted equities.
"There's a lot of money which I think very clearly is saying, if the Fed's not going to move... I certainly might buy some equity and this might only be a three/six month cycle but I'm going to take advantage of it," Milligan said.