* FTSEurofirst 300 closes up 0.7 pct at 1,380.00 points
* Euro STOXX 50 index rises 1.2 pct to 3,225.93 points
* Weak inflation puts more pressure on ECB for action
* Car makers fall after Ford slashes profit outlook
By Sudip Kar-Gupta
LONDON, Sept 30 (Reuters) - European shares rose on Tuesday as a batch of weak inflation data increased the chances the European Central Bank will introduce new stimulus measures to boost the region’s flagging economy.
Euro zone inflation slowed to 0.3 percent in September, in line with market forecasts, because of falling prices of unprocessed food and energy, according to a first estimate by the European Union’s statistics office.
Inflation in the euro zone remains below the ECB target of close to but under 2 percent as the regional economy stagnates. That makes it more likely the central bank will introduce full-blown quantitative easing (QE) and buy government bonds to stimulate the economy.
The pan-European FTSEurofirst 300 index closed up by 0.7 percent at 1,380.00 points while the euro zone’s blue-chip Euro STOXX 50 index advanced 1.2 percent to 3,225.93 points.
“At least the inflation figure was not complete deflation and investors will still be looking out for any hints on QE on Thursday, when the ECB meets,” said Rupert Baker, a European equity sales executive at Mirabaud Securities.
However, European automobile stocks missed out on the broader market rally and fell after U.S. car manufacturer Ford slashed its profit forecast for this year.
The STOXX Europe 600 Automobiles & Parts Index fell 0.6 percent, with French car company Renault declining 2.7 percent while Italian rival Fiat retreated 3.4 percent.
The Paris auto show takes place this week and while U.S. and Japanese car sales are back at pre-crisis levels, Europe is still 20 percent below its 2007 peak.
Some traders remained cautious on the broader market trend, pointing to tensions between China and Hong Kong, where tens of thousands of pro-democracy demonstrators extended a blockade of Hong Kong streets on Tuesday.
“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 Paris-based firm Perceval Finance.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today’s European research round-up (Additional reporting by Blaise Robinson and Laurence Frost; Editing by Mark Heinrich)