* FTSEurofirst 300 index rises 0.8 percent
* Standard Life leads insurers higher
* Italian banks fall
* Adecco down on margin squeeze
By Brian Gorman
LONDON, Aug 10(Reuters) - European shares rose on Wednesday, boosted by the U.S. Federal Reserve promising to keep interest rates near zero for at least two more years, though some strategists cautioned that this move indicated a lack of optimism on economic growth.
Shares extended a rally into a second day following a steep drop that had taken equities into a "bear market".
The U.S. Federal Reserve on Tuesday took the unprecedented step of promising to keep interest rates near zero until 2013, at the earliest, and said it would consider further steps to help growth, sparking a rebound in stocks.
"On the one hand it's a good thing as it provides liquidity and may be a precursor to QE3. The other side is that they are anticipating the long-term underperformance of the economy," said Ian King head of international equities at Legal & General, which has 356 billion pounds under management.
At 1106 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.8 percent at 955.88 points, adding to a 1.2 percent gain on Tuesday. A losing streak in the previous seven sessions had taken more than 14 percent off the index.
Investors have cut their exposure to risky assets such as stocks following an escalation of the euro zone debt crisis, the United States losing its triple-A credit rating and weak economic data from major economies that have sparked concern they may go back into recession.
The index is still down more than 19 percent from its 2011 peak of mid-February. Earlier this week, it was down more than 20 percent from this high, which qualifies as a bear market.
The fall has made some stocks look cheap, even though earnings forecasts are being cut. Equity valuations on Thomson Reuters Datastream showed the STOXX Europe 600 carrying a one-year forward price-to-earnings of 9.6 against a 10-year average of more than 13.
"Yes, markets do look cheap. However, we could have years and years of low growth to pay back our debts," Louise Cooper, markets analyst at BGC Partners, said.
Positive earnings news also boosted the market on Wednesday. British insurer Standard Life surged 12.8 percent after reporting a bigger-than-expected 44 percent jump in first-half profit, and said an investment programme that has been criticised by some analysts and investors was paying off.
Other insurers to gain included Aviva , and Legal & General , up 3.5 and 3.4 percent respectively.
GDF Suez rose 2.8 percent after the French utility unveiled first-half earnings that beat forecasts.
Across Europe, Germany's DAX rose 2.2 percent; and Britain's FTSE 100 and France's CAC40 rose 1.1 and 0.6 percent respectively.
GROWTH OUTLOOK
The Bank of England added to investors' concerns about growth, cutting its forecasts. By the fourth quarter of 2011, the BoE now sees an annual rate of growth of 2.0 percent, down from 2.5 percent in May.
L&G's Ian King said he expected growth to be "anaemic" but did not believe there would be a return to recession, though he said more investors were now pricing in a recession.
"We were much more optimistic earlier in the year on the basis that we would see concerted action from policymakers, but we just haven't seen it."
But he pointed to "a successful bond auction in Italy, with quite a low yield, that's given people some heart."
Italy sold 6.5 billion euros of one-year T-bills on Wednesday in a sale which analysts said went well after the European Central Bank's buying of the country's debt earlier this week brought borrowing costs significantly lower.
However, Italian banks fell as traders said investors could be swapping their bank shares into Italian bonds.
UniCredit and Intesa Sanpaolo fell 4 percent and 4.4 percent respectively.
Also on the downside, world No. 1 staffing company Adecco fell 7.3 percent after suffering a margin squeeze in the first half of 2011 as firms postponed new IT projects, particularly in the United States. (Additional reporting by Joanne Frearson; Editing by Hans-Juergen Peters)
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