UPDATE 2-European shares gain, auto rally lifts Germany to record high

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* Volkswagen shares eye best week on record
* Autos and banks sectors lead gains
* Fed's dovish outlook supports global mood
* FTSE 100 rises after BOE announcement

(Adds comments, updates prices throughout)
By Sruthi Shankar and Shreyashi Sanyal
March 18 (Reuters) - Automakers lifted the German DAX share
index to a record high on Thursday, while broader European
stocks inched towards all-time highs after the U.S. Federal
Reserve vowed to keep interest rates low despite forecasting a
surge in economic growth.
An index of euro zone's top 50 companies .STOXX50E gained
0.5%, briefly surpassing its peak hit in February last year,
before the COVID-19 pandemic hammered financial markets.
Germany's blue-chip DAX .GDAXI rose 1.2%, France's CAC 40
.FCHI was up 0.1%, while Britain's FTSE 100 .FTSE reversed
declines after the Bank of England said Britain's economic
recovery was gathering pace and left policy rates unchanged.

"That tells us the Bank is much more closely aligned with
the Federal Reserve's attitude to recent market moves than the
ECB's," said James Smith, developed markets economist at ING.
The pan-European STOXX 600 .STOXX rose 0.4%, but eased
from early highs due to losses in utilities .SX6P , chemicals
.SX4P and food & beverage .SX3P stocks.
With the 10-year U.S. Treasury yield US10YT=RR rising
after the Fed decision, economically sensitive sectors such as
automakers .SXAP , banks .SX7P and miners .SXPP led the
gains in Europe. A recent rise in government bond yields has stoked worries
about a pickup in inflation as trillions in dollars of stimulus
help global economies emerge from the pandemic shock.
However, European stocks have benefited as a rise in yields
sparked rotation into some of the cheaply valued sectors such as
banks and energy on hopes of a strong economic rebound.
"We expect further upside for bond yields in response to
sharp acceleration in global growth, rising inflation and
reduced monetary policy accommodation," said Milla Savova,
European equity strategist at Bank of America Merrill Lynch.
"In combination with our expectations for a euro area PMI
rebound and rising oil price, this would imply around a further
15% outperformance of value versus growth by late Q3."
Volkswagen VOWG.DE jumped 6.0%, sealing its position as
the most valuable company in Germany's DAX after it overtook
software maker SAP SAPG.DE on Wednesday. Its shares have racked up a 41.8% gain so far this week and
are on course to record the biggest weekly gain ever after it
stepped up its switch to fully electric vehicles. Swiss lender Credit Suisse CSGN.S gained 2.5% after it
said it was overhauling its asset management business amid
regulatory investigations into its dealings with collapsed
Greensill Capital. Telecoms equipment maker Nokia NOKIA.HE slipped 5.7%
despite forecasting a pick up in profit margins to 10%-13% in
2023. Swiss online pharmacy chain Zur Rose ROSEG.S fell 12.6% to
the bottom of STOXX 600 after disappointing full-year results
and outlook.