* STOXX 600 rises 0.3 pct
* Abertis soars to record high after Hochtief bid
* Prysmian also bounces to record on M&A chatter
* Reckitt, Elisa, Zalando fall after results (Recasts, adds details, updates prices)
By Danilo Masoni
MILAN, Oct 18 (Reuters) - Dealmaking activity helped European shares inch higher on Wednesday as the focus turned to a flurry of third-quarter company earning updates.
Spanish road toll operator Abertis soared to a record high after German builder Hochtief tabled a $20.1 billion bid, topping a rival offer from Italy's Atlantia.
Abertis rose 7 percent, leading gainers on the STOXX 600 index and helping the pan-European benchmark end up 0.3 percent, near four month highs.
Gains in Abertis also pushed the Spanish country index IBEX into positive territory and outweigh worries over the Catalonia crisis.
Spanish Prime Minister Mariano Rajoy urged Catalonia's leader to "act sensibly" and renounce an independence bid to head off a threat by Madrid to impose direct rule.
Madrid is set to take direct control of the region if the rebel regional government sticks to a plan to break away.
Hochtief rose 1 percent and its Spanish majority owner ACS rose 5.1 percent, while Atlantia slipped 1 percent.
A Milan-based trader said even though Hochtief's offer was very competitive, he expected Atlantia to fight back to get its hands on what it called a "once in a lifetime opportunity".
Merger and acquisition talk was not confined to Spanish motorways.
Shares in Prysmian, the world's largest cable maker, rose as much as 3.5 percent to a fresh record high as talk over a possible bid for U.S. rival General Cable intensified.
Elsewhere earnings were in focus with companies failing to meet expectations seeing their shares come under pressure.
The biggest STOXX fallers included Finnish telco Elisa and Zalando, which fell 5.4 and 3.8 percent respectively following disappointing updates.
Reckitt Benckiser fell 2.5 percent after the consumer goods firm cut its full-year sales forecast, struggling with fallout from a cyber attack, a failed product launch and a safety scandal in South Korea.
In the banking sector, Sweden's Handelsbanken slipped 1.5 percent after rising initially on the back of a third-quarter operating profit slightly above market expectations.
Sainsbury's, Britain's second biggest supermarket fell 0.6 percent after it said it aimed to cut up to 2,000 jobs.
European third quarter earnings are expected to grow by 4.5 percent from the same period in 2016, which would be an increase of 1.3 percent excluding the energy sector, according to Thomson Reuters I/B/E/S estimates.
Reporting by Danilo Masoni; Additional reporting by Julien Ponthus; Editing by Alison Williams