UPDATE 3-European shares hit six-week highs as BoE bolsters Fed-fuelled rally

* BoE cuts Q2 economic growth forecast
* U.S. central bank holds rates steady
* Italy leads gains among major indexes
* Deutsche Bank falls on report of U.S. probe

(Updates to close)
By Susan Mathew and Medha Singh
June 20 (Reuters) - European stocks surged to six-week highs
on Thursday, as dovish signals from the Bank of England and
Federal Reserve, allied to optimism around the resumption
U.S.-China trade talks, saw investors piling into riskier
assets.
The pan-European STOXX 600 index .STOXX finished 0.4%
higher, with most country indices in the black as investors
globally priced in the prospect of an easing of U.S. interest
rates next month and more to follow.
The Bank of England, in contrast to the Fed, continues to
threaten to raise and not lower rates, but its June meeting saw
the Monetary Policy Committee slash second quarter growth
forecasts to zero, heading off any market fears that it would
actually deliver a hike anytime soon. "The Bank of England was never going to rock the boat with
an interest rate rise, given static economic conditions and a
continued lack of direction on Brexit," Laith Khalaf, a senior
analyst at Hargreaves Lansdown wrote in a note.
"(But) with the Fed now striking a more dovish pose as it
also sees rising downside risks in the global economy, we
shouldn't entirely rule out the possibility the next interest
rate move may be downwards."
London's FTSE 100 .FTSE saw a sharp rise after the BoE
statement, and hit session highs increasing as much as 0.7%,
before closing up 0.3%. .L
Italy's FTSE MIB index .FTMIB was the outstanding
performer of the big European markets, rallying 0.7%, with
analysts pointing to signs the European Commission could hold
off on moves to discipline the country over rising debt.

Expectations of policy easing have helped drive a near 5%
gain for the STOXX 600 this month, helping the main index recoup
almost all of a steep sell-off that made May the worst month in
more than two years.
Tumbling euro zone bond yields pointed to more respite for
European public and private sector borrowers, while pressuring
interest-rate-sensitive banking stocks .SX7P , which lost 1.3%
as the worst-performing European sector.
Signs the United States and China will return to the
negotiating table over trade also bolstered sentiment, with
tariff-sensitive auto .SXAP and technology stocks .SX8P
gaining 0.8% and 1.6% respectively.
Germany's DAX .GDAXI hit its highest level in almost nine
months, helped by software company SAP SAPG.DE advancing 1.5%
after arch-rival Oracle ORCL.N forecast current-quarter profit
above estimates. German food delivery company Delivery Hero DHER.DE jumped
9.7%, the most on the benchmark index, after raising its full
year revenue outlook by 200 million euros.
One high-profile decliner was Deutsche Bank AG DBKGn.DE ,
which slipped 2.6% after a report U.S. federal authorities are
investigating whether the German lender complied with laws meant
to stop money laundering and other crimes. Swiss shares .SSMI hit new all-time highs in the session
as watchmakers got a boost from better than expected Swiss watch
exports data for May. Swatch UHR.S shares topped the index, up 2.2%, while
Richemont CFR.S rose 0.2%.

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