Britain's FTSE surges after BoE's "dovish" hike hits sterling

* FTSE up 0.9 pct, mid caps up 0.3 pct

* BoE (Shenzhen: 000725.SZ - news) hikes rates, sees only gentle rises ahead

* RBS (LSE: RBS.L - news) , Lloyds fall on monetary policy outlook

* Playtech (Frankfurt: A1J0S4 - news) falls 22 pct after warning

* BT falls as profit falls, Shell (LSE: RDSB.L - news) at 3-yr high (Adds closing prices, quotes)

By Danilo Masoni and Helen Reid

MILAN/LONDON, Nov 2 (Reuters) - Britain's top share index posted its biggest rise in over three months on Thursday after the Bank of England tempered investors' expectations on future rate rises, hitting the pound and lifting shares in internationally exposed companies.

The BoE raised interest rates for the first time in more than 10 years and said it expected only "very gradual" further increases over the next three years.

The FTSE outperformed its European peers, ending the day up 0.9 percent at 7,555.32 points, a two-week high, as the pound fell as much as 1.8 percent against the euro, its biggest retreat in more than 13 months against the single currency.

The mid cap index, which is less exposed internationally, was up 0.28 percent.

"The FTSE 100 was helped by the plunge in the pound", said David Madden, a market analyst at CMC Markets (LSE: CMCX.L - news) .

Among FTSE-listed companies with big international exposure, miners BHP Billiton (NYSE: BBL - news) , Rio Tinto (Hanover: CRA1.HA - news) , Antofagasta (LSE: ANTO.L - news) rose between 2.4 and 2.7 percent.

Prospects of a gentle tightening cycle however weighed on shares in domestically-focused banks like Lloyds and Royal Bank of Scotland, which both declined roughly 1 percent.

"Lloyds and RBS have greater net interest income sensitivity to rising rates. Expectations for a rate rise have gone down now because the tone of (Carney's press) conference is quite negative on future hikes. They were priced for more rate rises sooner," said Edward Firth, banks analyst at KBW.

HSBC and Barclays (LSE: BARC.L - news) , which have a wider international footprint, rose 0.6 and 0.5 percent respectively.

Elsewhere across the index, corporate earnings continued to be in focus.

Randgold was the biggest FTSE faller, losing 7.2 percent after the precious metals miner reported falls in third quarter production.

BT also suffered heavy losses, down 2.6 percent after the group posted a 4 percent drop in quarterly adjusted earnings, dragged down by ongoing problems at its Global Services unit, higher pension costs and sports rights.

Morrison Supermarkets fell 0.5 percent after Britain's fourth largest supermarket group reported another rise in quarterly sales, its eighth straight quarter of underlying growth though its rate of growth slowed a little.

"An in-line update from Morrison will do little to change the current debate on the shares," said Jefferies in a note.

Still in the sector, Tesco (Frankfurt: 852647 - news) added 0.6 percent and Sainsbury (Amsterdam: SJ6.AS - news) 's added 0.3 percent, while online supermarket Ocado fell 0.8 percent, as results from Morrison showed a slowing online contribution to sales.

Royal Dutch Shell (LSE: 0LN9.L - news) added 3.1 percent to its highest level since September 2014.

The oil major reported a near 50 percent rise in quarterly profits, driven by strong refining, while solid cash generation underscored that the oil and gas company has adapted well to a world of low oil prices.

On the mid cap index, Playtech fell 22.1 percent. The gambling technology company warned on annual profit on Thursday saying it will be around 5 percent below the bottom end of market expectations due to a slowdown in parts of Asia and problems with a bingo contract. (Additional reporting by Julien Ponthus; Editing by Catherine Evans and Emelia Sithole-Matarise)