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* FTSEurofirst 300 up 1.6 pct, DAX up 2.2 pct
* Stock markets extend ECB-inspired rally
* Drop in euro buoys sectors such as carmakers
* Gjensidige surges after profits beat forecasts
* TalkTalk slumps after cyber attack on website
By Danilo Masoni and Sudip Kar-Gupta
MILAN/LONDON, Oct 23 (Reuters) - European shares extended a rally on Friday, led by carmakers as investors speculated there could be more monetary support from the European Central Bank (ECB).
The pan-European FTSEurofirst 300 index rose 1.6 percent, building on a 2.1 percent gain in the previous session, while the euro zone's blue-chip Euro STOXX 50 index also advanced 1.7 percent.
The ECB kept interest rates unchanged at a record low on Thursday, but its chief Mario Draghi opened the door to a possible deposit rate cut and said the central bank would re-examine its quantitative easing scheme in December.
"Draghi has gone beyond expectations," said Consultinvest fund manager Enrico Vaccari. "I believe European equities have now the chance to climb back to their year highs as investors know the ECB is ready to use its super bazooka, and traditionally November and December have been favourable months for equities."
The STOXX Europe 600 Automobiles Index rose 2.2 percent to outperform other equity sectors. Carmaker benefited from a drop in the euro on the prospect of more monetary stimulus, since a weaker euro typically makes European cars more affordable for overseas buyers.
Germany's DAX rose 2.2 percent, helped by a rise in carmakers such as Daimler and BMW.
"The DAX is a big runner today, as it typically performs well on euro weakness," said Hance Markets analyst Richard Perry.
European stocks were also propped up by some solid earnings updates.
Shares in Norwegian insurer Gjensidige surged 14 percent after the company reported third-quarter profits ahead of market expectations.
French luxury goods group Kerning also rose 8.9 percent after the company reported a dip in sales that was not as bad as some analysts had feared.
However, Ericsson fell 6.4 percent after its third-quarter revenue and profits missed market expectations, while shares in British broadband supplier TalkTalk slumped 6.1 percent after a cyber attack on its website.
A.P. Moller-Maersk sank 6.9 percent after the shipping and oil giant cut its full-year outlook for underlying profit by 15 percent, citing deterioration in the container shipping market.
Nevertheless, most European third-quarter results so far have beaten or met expectations.
According to data from Thomson Reuters StarMine, 64 percent of companies on the European STOXX 600 index have posted earnings this quarter that have beaten or met market forecasts.
Today's European research round-up
Editing by Andrew Heavens