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UPDATE 1-European shares inch higher on media rally after ECB disappointment

Susan Mathew and Medha Singh

(For a live blog on European stocks, type LIVE/ in an Eikon news window) (Adds comments, updates prices)

July 26 (Reuters) - European shares inched higher on Friday, pushed up by a rally in media stocks, following a drop after the European Central Bank held out the possibility of more easing and a review of its inflation target, disappointing investors.

Europe's media sector advanced 1.6% as Vivendi rose 5% after stellar first-half results at its Universal Music Group raised the stakes for the sale of the French media giant's most-prized asset.

Pearson climbed 6.2% after the education company said it had traded well in the first half of 2019, while satellite operator SES rose 7% on confirming 2019 guidance.

The pan-European stock benchmark index rose 0.2% by 0825 GMT, recovering from its worst session in three weeks. On the week, the index is expected to rise 0.7%, improving from last week's marginal gains.

ECB President Mario Draghi on Thursday all but pledged to ease policy further and even hinted at a reinterpretation of the bank's inflation target. This disappointed some investors who had hoped for an immediate easing of interest rates.

The ECB statement dampened investor hopes that immediate central bank action would fend off any slowdown in the global economy, a sentiment that has led European stock indexes to multi-month highs since a steep fall in May.

"There is such a high level of expectation right now for central banks to step up and provide stimulus... in order to support the economy," said Craig Erlam, senior market analyst at Oanda in London.

"Any indication they are not going to be aggressive or they are not going to be immediate seems to be a bit of a disappointment."

Investors will now turn to second quarter reading of U.S. economic growth later in the day which comes ahead of a Federal Reserve rate meeting next week when a quarter basis point cut is expected.

Banco Sabadell's quarterly profit missing estimates sent its shares down -6.0%, pressuring the broader banks index.

Bank-heavy indices in Spain and Italy underperformed.

"The prospects of lower interest rates for longer would hurt banks' margins and affect their profitability. So it's not entirely surprising that we are seeing disappointing bank earnings," Oanda's Erlam said.

Vodafone jumped 7.4% on plans to create a European mobile mast company with potential for IPO, while Kitkat maker Nestle's gain of 1.6% on posting its fastest quarterly sales growth in three years, boosted the food and beverage index .

Luxury stock Kering slumped 7% as its main Gucci brand posted a slower-than-expected rise in second-quarter sales, hit by a blip in the United States.

The materials sector fell the most, with Anglo American dropping more than 5% after the mining company's biggest shareholder billionaire Anil Agarwal said he was divesting the nearly 20% stake he had been holding since 2017. (Reporting by Susan Mathew and Medha Singh in Bengaluru; editing by Gopakumar Warrier and Janet Lawrence)