Signs of stabilization in China's slowing economy helped lift European shares on Wednesday, though gains were kept in check by weak corporate earnings worldwide.

The China HSBC Flash Manufacturing Purchasing Managers Index (PMI) rose to a three-month high of 49.1 in October, but is still below the 50-point mark which separates contraction from expansion.

European shares <.FTEU3> opened around 0.1 percent higher after the data with London's FTSE 100 also about 0.1 percent up while the German DAX and Paris's CAC-40 rose 0.4 percent.

But these gains could come under pressure later if initial readings of euro area purchasing managers' indexes and the German Ifo business sentiment survey point to further deterioration in the region's weak economy.

"The HSBC manufacturing PMI has calmed markets a bit in Asia, but more important for Europe would be the European PMI's as well as the Ifo business climate data. I remain cautious in the short run," Unicredit strategist Christian Stocker said.

World share markets are in a fragile state after a string of disappointing earnings reports, particularly from many of the big multinational corporations in the United States.

On Tuesday, the Dow industrials suffered its biggest drop since June 21 when DuPont and United Technologies showed profit growth slowing, adding to the list of companies falling short of Wall Street's expectations.

The euro was stable around $1.2990 to the dollar as investors waited for Spain to ask for aid to help manage its huge public debts and for Greece to agree to the conditions needed for a further bailout.

Germany's Sueddeutsche Zeitung paper reported in its Wednesday edition, without citing sources, that euro zone states will grant Greece an extra two years to bring its budget deficit to within agreed targets.

The dollar was steady against the yen at 79.82 yen, having hit its highest since early July on Tuesday while the Australian currency rose to a high of $1.0317 after the PMI report on China.

The Aussie dollar had earlier strengthened on news that Australian consumer prices increased a surprisingly large 1.4 percent in the last quarter, lowering expectations for interest rate cuts.

A warning by Bank of England Governor Mervin King that non-standard monetary policy measures were losing their impact slightly reduced expectations for further monetary easing in the UK and lifted sterling 0.2 percent to $1.5990.

Brent crude futures snapped a six-day losing streak on the Chinese data, hitting a high of $109.28 a barrel before easing back to around $108.93.

Spot gold was steady at $1,708.59 an ounce after falling 1.2 percent to a six-week low of $1,703.50 on Tuesday as other assets fell.

(Reporting by Richard Hubbard. Editing by Anna Willard)