Upbeat results help British shares rebound from hefty falls

* FTSE index rises 0.6 percent after big one-day fall

* ARM, BP rally after Q4 beats

* BG falls following production warning

By David Brett

LONDON, Feb 5 (Reuters) - Britain's top share index rose early on Tuesday, recouping some ground after steep losses in the previous session as investors switched their focus to a generally solid set of company updates.

By 0854 GMT, the FTSE 100 was up 0.6 percent at 6,281.51, a day after suffering its biggest one-day fall in three months in profit taking from 4-1/2-year highs sparked by growing political uncertainties in Europe and a string of analyst downgrades.

"There are still (political and fiscal) issues out there but a lot of those have been mitigated, so I am expecting markets to continue pushing higher although there will be hiccups along the way," Neil Shah, director at Edison Research, said.

"There is clearly an increased appetite for the equity market and ...January is usually seen as indication of how the market is going to do for the rest of the year," he said.

Last month the FTSE 100 posted one of its strongest starts to a year, rising 6.4 percent

Credit Suisse said it was staying 'overweight' in equities, noting that for "92 percent of the time in which equities gained 4 percent or more in January, they have risen for the rest of the year".

Tuesday's corporate results were generally positive.

Chip designer ARM rallied 4.4 percent - the top gainer on the FTSE 100 albeit in light trade - after fourth-quarter profits that beat expectations.

Telecoms firm BT Group rose 1.9 percent as brokers and investment banks upgraded forecasts the day after strong third-quarter results.

Strong fourth-quarter figures also boosted oil heavyweight BP, which added 6.5 points to the index.

But oil and gas firm BG fell 2.7 percent after it said it would miss 2015 production targets.

Lender Barclays shed 0.3 percent, underperforming a rebounding banking sector,after saying it will increase its provisions for mis-selling financial products, leaving question marks over future profitability.

The fourth-quarter earnings season in Europe has so far been mixed, leaving investors uncertain as to whether profits can keep up with their price-to-earnings re-ratings, which are at post-credit-crisis highs of 12 times.

While 65 percent of companies have so far meet or beaten expectations, they have reported a 12.3 percent contraction in quarterly earnings year-on-year.

Analysts have cut earnings forecasts by around 6 percent on the whole for European companies over the last six months. (Written by David Brett; Editing by John Stonestreet)