* Key index hits 6-year high, lifted by company updates
* Broad share market rally eclipses Ukraine tensions
* Euro hits one-month low vs dollar on ECB outlook (Adds German data, fresh comments, detail)
By Emelia Sithole-Matarise
LONDON, May 13 (Reuters) - European shares rallied on Tuesday with a key index hitting a six-year high as upbeat corporate results and prospects of more stimulus from the European Central Bank boosted appetite for riskier assets.
Sentiment was supported by a media report saying Germany’s central bank would back an ECB rate cut, if needed, to shore up the region’s economy, extending euro losses against the dollar.
The report followed a survey showing a sharp decline in investor morale in Europe’s biggest economy, bolstering bets the ECB will ease monetary policy further next month.
U.S. stock index futures held steady a day after the Dow and the S&P 500 closed at record peaks. The rally was led by a rebound in pummeled internet and biotech stocks on strong corporate results and an improving economic outlook.
The run of positive corporate news continued in Europe, with Germany’s ThyssenKrupp raising its full-year earnings outlook on Tuesday, while aerospace group Airbus Group reported better-than-expected profits and reaffirmed its financial goals for the year.
The pan-European FTSEurofirst 300 index rose 0.2 percent to 1,367.17 points, its highest level since May 2008, while Britain’s FTSE hit a 14-year high.
“This first-quarter earnings season reflects the recovery in the macroeconomic landscape and, although it’s moderate, the negative currency impact seems lower than in the previous quarter,” said Joffrey Ouafqa, fund manager at Convictions AM, in Paris.
“If the macro recovery is confirmed, company results and share prices will follow. That’s what the market needs at this point because stocks are trading at fair value now.”
The rebound in global shares eclipsed rising tensions in Ukraine where pro-Russian rebels are threatening to break up the country. Global equity markets have so far brushed off a disputed weekend referendum in Ukraine in which pro-Moscow rebel organizers said nearly 90 percent had voted in favour of self-rule.
Asian shares rose earlier, led by a surge on Indian markets on expectations an election victory for the nationalist opposition BJP party, viewed as business-friendly, would spur a revival in the region’s third biggest economy.
The euro fell to a trough of $1.3708, its lowest since April 7, and down 0.4 percent on the day as bets strengthened that the ECB could ease monetary policy further next month.
A Dow Jones report, quoting unnamed sources, said the Bundesbank was willing to back a negative rate on bank deposits and purchases of packaged bank loans if needed to keep inflation from staying too low.
This prompted a further lurch in the euro, which had weakened earlier in the day to a one-month low after the German ZEW survey fell short of expectations.
“We see the euro trading with a downward bias given the market is expecting some kind of easing from the ECB next month. It is still not clear whether it will do quantitative easing, but a rate cut is more likely,” said Yujiro Goto, currency strategist at Nomura.
In Europe’s debt markets, lower-rated euro zone bond yields headed back towards record lows after a slew of bond sales met strong demand from investors anticipating ECB action.
Spain’s first-ever inflation-linked bond drew bids of more than 20 billion euros while Italy reached the top of its target range, selling 7.25 billion euros of debt, including 33-year paper. Spanish, Irish and Italian yields traded near record lows they reached last week.
Additional reporting by Blaise Robinson and Anirban Nag; Editing by John Stonestreet