UPDATE 2-Disappointing earnings updates weigh on FTSE 100; Italian shares shine

* German ruling parties agree extra economic support
measures
* Bayer jumps on future Roundup cancer claims deal
* Unilever slides on underwhelming sales growth target
* BOE pushes out negative interest rate timeline

(Updates to close)
By Shreyashi Sanyal and Susan Mathew
Feb 4 (Reuters) - European shares extended their rally to a
fourth straight day on Thursday, as investors hoped for a
swifter global economic recovery, while Unilever's disappointing
targets weighed on London's blue-chip index.
The STOXX 600 index .STOXX rose 0.6%, while London's FTSE
100 .FTSE ended flat, underperforming regional peers for a
second straight day, as consumer giant Unilever ULVR.L slumped
6.2% after its sales growth target underwhelmed
investors. .L
A slide in oil majors BP BP.L and Royal Dutch Shell
RDSa.L also weighed, with Shell reporting its lowest annual
profit in at least two decades. O/R Banks .FTNMX8350 and the sterling GBP= rose as money
markets pushed bets on negative UK interest rates out to
February 2022 after Bank of England said Britain's banks would
need at least six months to prepare for sub-zero rates.
"The BoE look unlikely to cut rates anytime soon, with a
six-month adjustment period meaning the UK economy will be well
into its recovery by the time they are even considered," said
Joshua Mahony, senior market analyst at IG.
Italian shares .FTMIB gained 1.7% to close at a one month
high, extending a rally after former European Central Bank chief
Mario Draghi accepted the task of forming a new government on
Wednesday.
The prime minister designate will conclude his formal
consultations with parties on Saturday, the parliament's press
office said in a statement on Thursday. A 5.3% jump in shares of Bayer BAYGn.DE lifted Germany's
DAX .GDAXI to one-month highs after the life science company
struck a $2 billion deal to resolve future legal claims that its
widely used weedkiller Roundup causes cancer. Meanwhile, Germany's ruling coalition parties on Wednesday
agreed a batch of additional measures to support those hit hard
financially by the COVID-19 pandemic. Global markets remained hopeful after Democrats pushed ahead
on Wednesday with a manoeuvre to pass U.S. President Joe Biden's
$1.9 trillion COVID-19 relief package without Republican
support. Among other companies reporting earnings, Swiss drugmaker
Roche ROG.S was the top boost on the STOXX 600 after it
forecasted a rise in 2021 sales and profit thanks to surging
demand for COVID-19 tests.