GLOBAL MARKETS-European stocks rise, Asia lifted by Japan stimulus

* Europe shares rise, Deutsche Bank down on revenue fall

* Japan stimulus lifts Asia shares, drives yen lower

* Wall St to open higher, futures show

* Oil falls, down 15 pct from June peak

* Eyes on Fed policy announcement at 1800 GMT

By Nigel Stephenson

LONDON, July 27 (Reuters) - Stocks rose in Europe and Asia on Wednesday while the yen sank against the dollar, after Prime Minister Shinzo Abe said his government would present a $265 billion stimulus package to reflate the Japanese economy.

The larger-than-expected figure helped lift Tokyo stocks 1.7 percent and Asian shares to one-year highs. It was unclear how much would be spent to boost growth directly but analysts said the package put pressure on the Bank of Japan, meeting on Friday, to take steps to ease monetary policy.

Wall Street looked set to open higher, with Dow Jones and S&P 500 futures up about 0.2 percent

The pan-European STOXX 600 index rose 0.6 percent, led higher by the auto and luxury sectors on a busy day of company earnings. LVMH rose 7.5 percent after its fashion and leather sales beat forecasts.

However, Deutsche Bank dropped 4.5 percent after announcing sharply lower second-quarter revenues as low interest rates and volatile markets weighed on the business. Chief Executive John Cryan warned deeper cuts may be needed.

Britain's FTSE 100 index gained 0.4 percent. Germany's DAX index rose 0.8 percent and has recouped all losses incurred since Britain's June 23 vote to leave the European Union.

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent, having earlier climbed to its highest level since Aug. 11, 2015. It has risen 10 percent so far this month.

Chinese stocks , however, had their weakest day in six weeks on worries about new regulatory restrictions.

MORE DOLLAR DOWNSIDE?

In currency markets, the dollar rose 0.9 percent to 105.50 yen, having risen as far as 106.54 at one point, after reports of the Japanese stimulus package.

"So far it looks like the Bank of Japan is not ready to do something new and that leaves the potential for more downside for the dollar before the meeting on Friday," said Thu Lan Nguyen, a currency strategist with Commerzbank in Frankfurt.

Gains against the yen pushed the dollar up 0.1 percent against a basket of currencies before a policy announcement from the Federal Reserve later in the day.

The U.S. central bank is not expected to change policy this month but investors will scour its statement, due at 1800 GMT, for any hints on the timing of future rate hikes.

Stronger U.S. economic data of late has revived expectations of a Fed hike and markets see roughly an even chance of a rate rise in December.

Two-year U.S. Treasury yields, seen most sensitive to higher rates, held close to four-week highs. By contrast Japanese two- and five-year government bond yields hit record lows of minus 0.37 and minus 0.38 percent respectively.

German 10-year Bund yields, the benchmark for euro zone borrowing costs, fell 1.5 basis points to just above minus 0.10 percent.

Germany auctioned 1 billion euros of 30-year bonds at a record low yield as investors bought them in anticipation of the European Central Bank needing to buy more longer-dated bonds under its asset-purchase scheme as low yields at short maturities put half of German debt out of the scheme's reach.

"Investors want to have something to sell on to the central bank," DZ Bank strategist René Albrecht said.

Oil prices fell, staying close to near three-month lows hit earlier this week on concerns about a glut of some products and slowing economic growth.

Brent crude traded down 56 cents a barrel at $44.31. It has fallen some 15 percent since hitting an eight-month high in early June.

Gold held at $1,320 an ounce, barely changed from late on Tuesday.

(Additional reporting by Saikat Chatterjee in Hong Kong, Patrick Graham and John Geddie in London; editing by John Stonestreet/Ruth Pitchford)