* FTSEurofirst 300 index up 0.2
* Oils gain; BP up as beats forecasts
* Financials fall; ING woes By Joanne Frearson
LONDON, Oct 27 (Reuters) - European shares edged higher in early trade on Tuesday, snapping a sharp three-day drop, with energy stocks taking the lead after oil heavyweight BP's third-quarter results beat forecasts.
By 0937 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.2 percent at 998.60 points in a choppy session, having been up as high as 1,001.81 points and down as low as 996.15 points.
The index which is up 20 percent so far this year, has gained 54 percent since reaching a floor in early March, helped by improving macroeconomic data and better-than-expected earnings.
"BP is ahead of expectations which is good news, but we have had a strong market environment which obviously helped," said Peter Dixon, economist at Commerzbank.
"Investors are still concerned about committing huge amounts of cash to equities, they are not sure whether there is going to be a bigger correction," he said.
Energy stocks added the most points to the index, with BP gaining 4.7 percent.
The company beat third-quarter earnings forecasts by a big margin as its cost-cutting programme proved more successful than expected, prompting the British oil major to increase its target for savings for the year. BG Group, Royal Dutch Shell and Total were 0.6 to 1.5 percent higher.
Industrial engineers were in demand. Vestas Wind soared 10 percent after it reported a bigger-than-expected rise in operating profits for the third quarter.
FINANCIALS FALL
Financials were under pressure on further market jitters following Monday's news that Dutch bancassurer ING would split in two and launch a bumper rights issue. ING fell 6.8 percent.
Banks took the most points off the index. Royal Bank of Scotland, Lloyds Banking Group, Societe General, Barclays and Standard Chartered were down 1.6 to 6.1 percent.
Chemical stocks were mostly on the downside. Shares in Akzo Nobel lost 7.8 percent after it warned that markets still remain fragile as sales fell 10 percent.
But Bayer gained 0.5 percent after it reaffirmed its full-year outlook and posted forecast-beating operating earnings, helped by a continued recovery at its plastics division.
Mining stocks were lower. Anglo American, Antofagasta, Vedanta Resources, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata were down 0.9 to 5.6 percent.
Later in the session, investors will eye the U.S. Case/Shiller Home Price Index for August at 1300 GMT and U.S. Consumer Confidence figures, due at 1400 GMT.
"The S&P/Case-Shiller Home Price Index for August is the most important thing today. There has been tentative signs that it has bottomed, if it is up again then that would be positive," said Bernard McAlinden, strategist at NCB Stockbrokers.
Across Europe, the FTSE 100 index was 0.02 percent lower, Germany's DAX was down 0.03 percent and France's CAC 40 was up 0.1 percent. (Reporting by Joanne Frearson; Editing by Rupert Winchester)