* STOXX 600 down 0.1 pct, FTSE down 0.2 pct
* ECB cuts inflation forecasts, signals end to rate cuts
* Italian banks in focus on rescue talk
* RWE, E.ON extend gains
(Recasts, adds detail, updates prices)
By Danilo Masoni and Kit Rees
LONDON, June 8 European shares dipped on
Thursday after the European Central Bank signalled an end to
rate cuts and as Britons voted in a general election, though
stronger utilities were a bright spot.
The STOXX 600 was down 0.1 percent in choppy trade
by 1334 GMT, while Britain's blue chip FTSE index was
down 0.2 percent.
European equities hit a session low while banking stocks
briefly turned negative after the ECB cut its inflation
forecasts for the euro zone and signalled that it would not cut
interest rates further.
Euro zone banks also touched a session low and were
last up 0.5 percent.
"The biggest surprise has been that the ECB downgraded its
inflation forecast and thereby automatically implies ... that it
will provide monetary accommodation for quite a substantial time
to come," Dr. Frank Engels, head of multi-asset and investment
committee at Union Investments, said.
"In essence, it means the low interest rate environment will
remain for quite a long time and that will be a headwind to the
profitability of banks," Union Investments' Engels added.
The pan-European benchmark has struggled since hitting a 21-
month high in May with investors seeking fresh catalysts after a
rally fuelled by strong earnings and record inflows.
On Thursday the congressional testimony in the U.S. from
ex-FBI director James Comey, who was fired by President Donald
Trump last month, will also keep investors on the edge.
"Markets are longing for more certainty, which will be
needed in order to post the next leg higher. Today and tomorrow
certainly have the potential to provide traders with a clearer
outlook where the UK, the US and the Euro-zone is concerned,"
said Markus Huber, a trader at City of London Markets.
In Britain, opinion polls on Wednesday showed that Prime
Minister Theresa May was on course to increase her majority in
parliament in Thursday's election, helping sterling.
Bank stocks rose for a second day following
the swift rescue of Spain's Banco Popular by bigger
rival Santander, but Italian banks were under pressure
on reports they could join the state in the rescue of troubled
regional lenders in the Veneto region.
A source familiar with the matter said Rome was putting
pressure on heavyweights Intesa SanPaolo and UniCredit
to take part so that other banks would follow their
example. Intesa edged 0.7 percent higher and UniCredit gained
The broader euro zone bank index gained 0.5 percent.
"The important thing is to get a solution fast and remove
the uncertainty," Stefano Fabiani, fund manager at Zenit said.
"Santander wobbled a bit early yesterday but then it went
positive. And it’s the same thing here."
Santander in Madrid rose 3.2 percent.
Utilities also rose with RWE and E.ON
up 2.1 and 3.7 percent respectively, adding to their rally in
the previous session after a nuclear energy tax which penalised
them was scrapped.
(Reporting by Danilo Masoni and Kit Rees; Editing by Tom
Heneghan and Toby Davis)