UPDATE 2-BAT and financials lift European stocks after Fed blow

(For a live blog on European stocks, type LIVE/ in an Eikon
news window)
* FTSE hit by Shell, miners, BoE growth forecast cut
* LSE surges to record high on Refinitiv deal
* BAT shares jump after beating H1 sales forecast

(Updates to close)
By Sruthi Shankar and Medha Singh
Aug 1 (Reuters) - European shares ended higher on Thursday
as strong earnings from British American Tobacco and a
multibillion dollar merger in the financial sector helped dispel
early gloom after the U.S. Federal Reserve played down prospects
for several rate cuts.
Providing the biggest boost to Europe's main STOXX 600
.STOXX , which closed up 0.5%, was a 7% jump in shares of
British American Tobacco BATS.L after it beat first-half sales
forecasts and predicted a stronger second half. London Stock Exchange Group LSE.L rose 6.5% to a record
high after it formally announced its $27 billion merger with
financial information firm Refinitiv, lifting Europe's financial
services index .SXFP 2.3% and making it the top gainer.
"This seems to be a deal which puts LSE back on the map
after a very uncertain period when it was almost bought out and
gives it an opportunity to compete with some of the bigger
names," said Craig Erlam, senior market analyst at Oanda.
Reuters News' parent Thomson Reuters holds a 45% stake in
Refinitiv and will own 15% in LSE after the deal.
The banking sector .SX7P was boosted by results from
European majors Barclays BARC.L , Standard Chartered STAN.L
and Societe Generale SOGN.PA .
Barclays climbed 1.2% after it raised its interim dividend.
Asia-focused Standard Chartered was up 3.3% following strong
first-half profits and France's SocGen gained 5.8% after it hit
its solvency target a year early. European markets opened in the red following overnight
weakness on Wall Street and Asian markets after the Federal
Reserve cut interest rates, as expected, but disappointed
investors hoping for a clear sign of several more cuts to come
to support growth and stock market valuations. The dent to sentiment from the Fed hurt commodities markets,
with a fall in iron ore, copper and oil prices pulling down
shares of mining and energy majors. O/R MET/L IRONORE/
The oil and gas sector slid 1.5%, hit by a slump in shares
of Royal Dutch Shell RDSa.L after its second-quarter profit
dropped to a 30-month low on weaker gas prices and refining
margins.
The materials index .SXPP , down 3%, recorded its biggest
percentage fall since December 2018, with London-listed shares
of Rio Tinto RIO.L slipping despite the company reporting a
12% jump in first-half profit and declaring a bumper dividend.
As a result, London's FTSE 100 .FTSE lagged its European
peers. Adding to the gloom there, the Bank of England lowered
its growth forecasts for Britain in the face of growing Brexit
worries and a slowing global economy. The UK-exposed midcap FTSE
250 .FTMC was down 0.2%.