* FTSEurofirst 300 up 0.3 pct, set for 3.9 pct yearly gain
* FTSE 100 only major European index to eye yearly fall
* Ballast Nedam surges on merger/acquisition approaches
By Francesco Canepa and Sudip Kar-Gupta
LONDON, Dec 31 (Reuters) - European shares edged higher on Wednesday, keeping most regional indexes on track to end a tumultuous year with modest gains after a late rebound.
The FTSEurofirst 300 index of pan-European shares, up 0.3 percent at 1115 GMT, was sitting on a 3.9 percent gain for the year.
The index has surged more than 7 percent since Dec. 16, with many investors buying on the premise that the European Central Bank will announce sovereign bond purchases early next year in a bid to revive inflation in the currency bloc.
A quantitative easing (QE) programme, the prospect of which has met with resistance from euro zone paymaster Germany, is seen by investors as boosting the attraction of equities by further lowering bond yields.
"Our take is that ECB QE will be announced in March," said SteppenWolf Capital chief investment officer Phoebus Theologites. "Despite the objections of the Germanic bloc, we view QE as unavoidable."
Dutch construction group Ballast Nedam was the standout performer on Wednesday as its shares surged 25.6 percent after an approach on a possible merger or takeover.
Most of Europe's stock markets were either shut or only trading for half a day.
France's CAC-40 advanced 0.6 percent while Spain's Ibex was flat. The German and Italian stock markets were shut .
Britain's blue-chip FTSE 100 index, up 0.3 percent on Wednesday, was the only major European index to eye a yearly loss, due to its high exposure to the energy and commodities sectors. It was down 2.7 percent for the year.
Copper was set to post its worst annual decline in three years on worries about growth in top consumer China.
The price of Brent crude has halved in 2014 and was heading for its biggest annual decline since 2008, pressured by weakening demand and a supply glut prompted by the U.S. shale boom and OPEC's refusal to cut output.
Greek shares fell for a fourth straight session, taking their yearly loss to nearly 30 percent. The country is heading for an early general election on Jan. 25, which radical leftist party Syriza is tipped to win.
Investors, however, largely believe that any hit to European markets from Greece would be mitigated by firewalls raised by European institutions following the sovereign debt crisis, such as the euro zone's bailout fund, and ECB bond purchases.
"A new Greek crisis would inevitably lead to temporary tensions on other EA (euro area) issuers," said Luca Mezzomo, an analyst at Intesa Sanpaolo. "However, the risk of contagion is now very limited."
($1 = 0.8229 euros)
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Editing by Catherine Evans)