* FTSEurofirst 300 index rises 0.3 pct
* Cyclicals advance, financial services sector up
* Man Group rises; Erste, Pearson slip
By Atul Prakash
LONDON, Feb 28 European shares edged higher on Friday, with cyclical stocks boosted by positive company news and expectations that a further drop in euro zone inflation may prompt the European Central Bank to ease policy.
Figures due at 1000 GMT are forecast to show inflation in the currency bloc falling to 0.7 percent in February from 0.8 percent in the previous month, according to a Reuters survey, but some analysts expected an even lower reading of 0.6 percent.
"The inflation data could be a trigger for the ECB to cut rates again. In the second half of the year, you could also see the central bank start buying assets in the American style," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said.
"These measures have potential to favourably impact the market."
A third of economists polled by Reuters has pencilled in a cut in the ECB's refinancing rate from 0.25 percent at its March 6 meeting.
At 0848 GMT, the FTSEurofirst 300 index of top European shares was up 0.3 percent at 1,348.76 points, supported by sectors such as financial services, insurance and technology.
The European financial services index rose 0.7 percent to the top of the sectoral gainers' list, led higher by Man Group.
The hedge fund company, which surged 14 percent on Thursday after announcing a share buyback and bumping up its dividend, rose another 4.6 percent after UBS, Barclays and Jefferies raised their price target for the stock.
Among other sharp movers, financial services group Old Mutual jumped 4.6 percent after posting a 15 percent rise in profits.
European stocks were also supported by U.S. equities after the S&P 500 closed at a record high on Thursday after Federal Reserve Chair Janet Yellen said harsh weather seemed to be behind recent U.S. economic softness.
The FTSEurofirst 300 index headed for its best monthly performance since July last year, however some disappointing company news and Ukraine tensions kept gains in check, traders said.
Austrian lender Erste Group plunged 7.5 percent after proposing to halve its dividend, while British publisher Pearson fell 6.6 percent after warning its earnings could fall in 2014. Pearson's results came in within the range of already downgraded forecasts.
Investors also remained nervous about the situation in Ukraine, where armed men took control of two airports in the Crimea region on Friday in what Ukraine's government described as an invasion and occupation by Russian forces, stoking tension between Moscow and the West.
"Ukraine is a political risk. As long as the markets are convinced that Russia is not going to take a hard stance on the issue, it is something to watch but not a game changer," Gijsels said.
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