* FTSEurofirst up 0.5 percent
* UK Q3 GDP beats expectations; outlook good for China factories
* Miners rise, Citi ups targets for precious metals stocks
* WPP, Daimler, France Telecom fall on earnings
By David Brett
LONDON, Oct 25 (Reuters) - European shares rose on Thursday after China said factory output was set to accelerate and Britain's economy grew faster than expected in the third quarter.
The FTSEurofirst touched a session high of 1,100.71 after data showing UK GDP rose 1.0 percent between July and September
Growth was boosted in part by strong ticket sales for the London Olympics, and the country's finance minister said Britain still faced economic challenges at home and abroad.
"(This is) no time for shirts over the head in jubilation," a London-based trader said.
The index later pared gains and was up 5.29 points, or 0.5 percent, at 1,099.00, by 1030 GMT, trading within its recent tight range.
Basic resource stocks benefited after Chinese officials said the country's factory output should grow faster in the last three months of 2012 than in the third quarter.
Precious metal miners led gainers, with Citigroup raising target prices across the sector. Fresnillo rose 2.6 percent after the investment bank upgraded its stance to "neutral" from "sell".
Growing expectations that the Bank of Japan will unveil more monetary stimulus at Oct. 30 policy meeting also underpinned the market.
For stock market investors, recent stimulus action by central banks has been offset by fragile global economic growth and a thus-far mixed third quarter earnings season, leaving the FTSEurofirst stuck in a 30-point range since early September.
Finnish forestry group UPM-Kymmene, Britain's WPP - the world's largest advertising group - and German carmaker Daimler all fell after disappointing results.
France Telecom shed 2.4 percent after it slashed its dividend as a price war in the sector weighed.
John Haynes, head of research at Investec Wealth & Investment, said share markets could be set for a tough three months.
"We have a difficult earnings season upon us, some political uncertainty in the U.S. ... at the same time in China you have a power transition having a material impact on demand," he said.
But once those hurdles were cleared, equity investors could be set for a decent 2013.
In the United States, 59.1 percent of companies have reported earnings above analyst expectations so far, compared with 67 percent over the past four quarters.
Against that subdued backdrop, the U.S. Federal Reserve has said it would stick to its stimulus plan until the job market improves.
In Europe, 43 percent of companies have so far missed earnings forecasts, according to Thomson Reuters data.
Highlighting the still difficult economic environment, some firms that reported on Thursday benefited from low investor expectations.
French drugmaker Sanofi and water and waste company Suez Environment rose 2.6 and 4.7 percent respectively after reporting profits slowed less than expected.
Credit Suisse gained 2.6 percent after saying it would cut an extra 1 billion Swiss francs ($1.1 billion) of costs and axe more jobs after its third-quarter net profit more than halved.
Earnings due in the United States could set the tone for later in the session, with Apple, Amazon and P&G set to report.