* FTSEurofirst 300 rises 1.4 pct, hits 7-year high
* European shares enjoy best 2-week rally in 5 years
* Cyclical stocks such as carmakers among top gainers
* Drop in euro seen as big positive catalysts for earnings
By Blaise Robinson
PARIS, Jan 23 (Reuters) - European shares rose in early trade on Friday, enjoying their best two-week rally in five years, as investors cheered the European Central Bank's decision to buy government bonds.
Cyclical stocks such as carmakers, seen as the big winners of the drop in the euro currency, featured among the biggest gainers, with BMW up 4.4 percent and PSA Peugeot Citroen up 3.7 percent.
"The effect of QE is already here, look at the euro," said Alexandre Baradez, chief market analyst at IG France.
"Its drop has been spectacular. It will be a major boost to exports and will lift confidence among company executives. Industrials will be among the top winners."
On Thursday, ECB President Mario Draghi said the central bank would embark on quantitative easing - printing money to buy government bonds. Together with existing schemes, the programme will pump 60 billion euros a month into the euro zone economy from this March until at least September next year.
The prospect of QE has knocked the euro lower in the past months, with the single currency hitting a low of $1.265 on Friday, down from $1.40 in May.
A weak euro is seen boosting European corporate earnings this year, particularly for exporters. Strategists say a 10 percent fall by the euro translates into a 6 to 8 percent rise in earnings for the region's companies.
The new ECB programme was also seen as boosting the region's economy overall, with Renault Nissan Chief Executive Carlos Ghosn upgrading his European car market growth forecast on Thursday.
Ghosn told participants at the Davos World Economic Forum that he now expects Europe's car market to grow by at least 2 percent in 2015, against 1-2 percent previously.
Euro zone banks, seen benefiting from a rebound in corporate lending as the ECB's quantitative easing kicks in, also featured among the top gainers on Friday. Raiffeisen Bank International rose 3.9 percent and Commerzbank was up 3.1 percent.
At 0916 GMT, the FTSEurofirst 300 index of top European shares was up 1.4 percent at 1,474.15 points, a seven-year high.
The benchmark index has surged 9.4 percent in the past two weeks, its strongest two-week rally since mid-2009. It is up 7.8 percent so far this year, outperforming Wall Street, where the S&P 500 is up 0.2 percent in 2015.
Europe's outperformance over the United States is expected to continue in 2015. European equities are ripe for a catch-up rally after years of underperformance.
Today's European research round-up (editing by Dominic Evans)