* FTSEurofirst 300 up 0.1 pct, Euro STOXX 50 up 0.3 pct
* RBS jumps after cutting provisions for bad loans
* Auto stocks hurt by Ford's profit warning
* All eyes on euro zone inflation figures due at 0900 GMT
By Blaise Robinson
PARIS, Sept 30 (Reuters) - European stocks inched higher in early trading on Tuesday, halting a recent slide, with shares of Royal Bank of Scotland rising after the UK lender cut provisions for bad loans.
RBS stock surged 3.9 percent after the group said it would release 800 million pounds ($1.3 billion) from provisions it had set aside to cover losses on bad loans after an improvement in the economy, especially in Ireland.
Shares in the auto sector lost ground, with Daimler down 1.1 percent and Renault down 2.4 percent, as traders cited a warning from U.S. carmaker Ford about its outlook that sent its shares down 8 percent on Monday.
At 0738 GMT, the FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,373.05 points, taking a breather after a 3.4 percent slide in the past seven sessions.
"There is still a lot of hesitation. We're getting some bearish signals such as a rise in volatility and a drop in shares of financial institutions. There's just no direction at this point, but I remain cautious," said Jean-Louis Cussac, head of Perceval Finance, in Paris.
The Euro STOXX 50 Volatility index has surged in the past two weeks, signaling a rise in risk aversion. The higher the index - used to measure the cost of protecting stock holdings against market corrections as it usually moves in the opposite direction to cash equities - the lower investor appetite for risky assets such as stocks.
Gains in equities on Tuesday were capped as China's final HSBC/Markit Manufacturing Purchasing Managers' Index (PMI) hovered at 50.2 in September, unchanged from the August reading which was a three-month low, but lower than a preliminary reading of 50.5.
Also keeping investors on edge, tens of thousands of pro-democracy protesters extended a blockade of Hong Kong streets on Tuesday, stockpiling supplies and erecting makeshift barricades ahead of what some fear may be a push by police to clear the roads before Chinese National Day.
On the macro front, investors awaited September inflation data for the euro zone, seeking cues on the prospect for European Central Bank to step up its efforts to stave off deflation risks.
Around Europe, UK's FTSE 100 index was down 0.1 percent, Germany's DAX index up 0.05 percent, and France's CAC 40 up 0.5 percent.
Next featured among the top losers, down 3.2 percent after Britain's second biggest clothing retailer said it would have to lower its full-year profit forecast if the country's unusually warm autumn weather continues.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
Editing by Tom Heneghan