* FTSEurofirst 300 up 0.3 pct, Euro STOXX 50 rises 0.2 pct
* Expectations of ECB action lifts European stock markets
* Solvay surges 8 pct, St Gobain falls over 10 pct
By Sudip Kar-Gupta
LONDON, July 27 (Reuters) - European shares rose in choppy trade on Friday, with Belgian chemicals group Solvay among the top performers, as fresh signs that the European Central Bank might step in to battle the region’s debt crisis boosted weakened equity markets.
The FTSEurofirst 300 index rose 0.6 percent to 1,049.25 points, while the Euro STOXX 50 index rose by around 1 percent.
Trading was volatile, with many investors still uncertain over whether Europe’s political leaders will be able to agree on steps to prevent the crisis from engulfing Spain and Italy.
The FTSEurofirst at one stage fell to 1,039.29 points, before recovering after French newspaper Le Monde reported that euro zone governments and the ECB were preparing to intervene on financial markets to bring down Italian and Spanish borrowing costs.
“We’ve got a bit of breathing space for the markets, but to my mind, the outlook is still rather gloomy and the bias is towards the downside,” said Mike Turner, European equity options broker at XBZ Ltd.
The FTSEurofirst’s rebound on Thursday followed a fall of more than 4 percent over the previous four trading sessions, and the index could still end the week in negative territory after seven straight weeks of advances.
Belgian company Solvay was the best-performing stock on the FTSEurofirst 300 index, rising 8.3 percent after it stuck to its full-year forecasts, but French construction group St Gobain slumped more than 10 percent after issuing a bleak outlook.
Traders and investors warned the European stock market rally could be short-lived, given that European policymakers have previously disagreed on the details of how to combat the region’s sovereign debt crisis.
On Friday, Germany’s Bundesbank dampened expectations for further action by the ECB by upholding its resistance to the ECB buying bonds, and the region’s economic woes were further highlighted by record unemployment figures in Spain, whose struggle to generate growth is at the heart of its budget problems.
Adrian Slack, head of equities at Bastion Capital, remained cautious over the rally, saying he would cut exposure to stocks on the back of any sudden move upwards.
Slack said he would look to sell the Euro STOXX 50 index at 2,322 points, and Germany’s DAX at 6,780 points.
“I‘m still a seller into the rally. He’s (Draghi) got to do it within the framework of the European Union, and it hasn’t worked so far,” he added.