* FTSEurofirst 300 rises 0.7 percent; snaps 3 days of losses
* BP's impressive results boost energy sector
* Financial shares under pressure, sector index down 0.6 pct
By Atul Prakash
LONDON, Oct 27 (Reuters) - European shares gained ground on Tuesday after slipping in the previous three sessions, with BP's results beating forecasts by a wide margin boosting oils and ING continuing to cast a shadow on banks. The FTSEurofirst 300 index of top European shares was up 0.7 percent at 1,003.44 points at 1150 GMT after falling 1.2 percent on Monday. The index is up 20 percent this year and has gained 55 percent since hitting a record low in March.
Energy shares were among the top gainers, with DJ STOXX oil and gas sector index jumping 2.6 percent after BP beat third-quarter earnings forecasts in a sign its restructuring plans were delivering results. Its cost cuts were ahead of targets, and its oil and gas output up strongly.
Firmer crude oil prices ahead of weekly crude inventory data from the United States also supported the sector. BP rose 4.2 percent, while Royal Dutch Shell, BG Group, Repsol, Total and StatoilHydro added 0.8 to 2.0 percent.
Investors' appetite for risky assets bounced back, with the VDAX-NEW volatility index falling 2.1 percent after it had jumped 11 percent in the previous session. The lower the volatility index, which is based on sell and buy options on Frankfurt's top-30 stocks, the higher is the market's desire to take risks.
"From a risk-return profile, equities have gained attractiveness. But this is not going to be a one way street in terms of equities rising constantly," said Klaus Wiener, head of research at Generali Investments.
"There is still a lot of uncertainty in the market. There will be spells when people will doubt the sustainability of the recovery," he added.
Investors awaited monthly U.S. consumer confidence data, due at 1400 GMT, for further market direction.
Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 rose 0.3 to 0.6 percent.
FINANCIALS UNDER PRESSURE
Financials came under pressure as Dutch bancassurer ING's struggles rippled across the European banking sector. The DJ STOXX banking index fell 0.6 percent, while Standard Chartered, HSBC, Barclays, Lloyds, Royal Bank of Scotland, BNP Paribas and Societe Generale were down 0.5 to 2.5 percent.
Shares in ING fell for a second day, down as much as 14 percent in early trade before recovering, as analysts said a pending 7.5 billion euro rights issue was likely to come with up to 50 percent dilution for current shareholders.
ING sank 18 percent on Monday after it said it would split in two, repay some of its Dutch state aid early and launch the massive rights issue, all part of its restructuring talks with the European Union.
Spain's second-largest bank BBVA's was down 0.2 percent. Its nine-month net profit was slightly weaker than a year ago and it raised loan provisions to counter tough conditions in core markets Spain and Mexico.
"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," Commerzbank economist Peter Dixon said.
Improved margins helped Dutch chemicals group Akzo Nobel overcome falling sales and post a surprise rise in third-quarter operating profit, but shares fell 6.6 percent on nagging worries over the company's outlook.
On the positive front, Danish wind turbine builder Vestas jumped 8 percent after it beat third-quarter profit expectations as input costs came off their 2008 peaks and stuck to its full-year 2009 guidance.
Germany's largest drugmaker Bayer was up 0.5 percent. It reaffirmed its full-year outlook and posted forecast-beating operating earnings, helped by a continued recovery at its plastics division.
Dutch telecoms group KPN rose 1.3 percent. Its third-quarter operating profit was up slightly as the company managed to squeeze out costs, but it said it saw "no sign of recovery yet" in its business markets due to the recession. (Additional reporting by Joanne Frearson; editing by Karen Foster)