UPDATE 2-Auto-stocks drive European shares higher on tariff delay hopes

* Most European bourses rise, Milan lags

* Auto stocks surge on possible tariff reprieve

* Raiffeisen Bank, Credit Agricole fall after results (Updates to close, adds graphic and quote, recasts)

By Medha Singh and Aaron Saldanha

May 15 (Reuters) - European stocks surged late in Wednesday's session to wipe away early losses after U.S. officials said President Donald Trump was expected to delay auto tariffs by up to six months.

A formal announcement is expected by Saturday, they said.

The news spurred investors to boost positions in tariff-sensitive firms, aiding a recovery among a swathe of European stocks. pan-European STOXX 600 index .STOXX rose 0.5%, buoyed by a 2% gain in shares of tariff-sensitive auto makers and their suppliers .SXAP , with BMW BMWG.DE tacking on 3.1%.

The broad benchmark had fallen as much as 0.7% earlier in the day, while auto stocks had plumbed a 1-1/2 month trough, down 2.1%.

Atlantic Markets' John Woolfitt said it appeared the market was relieved that Trump "can actually act in a civilised manner and isn't on a total rampage inciting trade wars across the globe," giving the partnership and relationship with the EU "some much needed respite".

"Whilst he is entangled in the ongoing dispute with China, it gives the impression he is reluctant to travel down the same road with the EU."

Frankfurt's auto-heavy DAX .GDAXI and London's FTSE 100 .FTSE rose 0.9% and 0.8%, respectively, while their Milan-traded peers .FTMIB dipped 0.1% on weakness among the country's banks.

Shares of Italian lenders .FTIT8300 have been pressured this week, as yields on the sovereign's bonds continue to rise a day after Deputy Prime Minister Matteo Salvini said Rome was ready to break EU fiscal rules. GVD/EUR

"Pressure on Italy is mounting ... the doom loop, linking the banks to the sovereign, remains strong," said Marc C. Chandler, chief market strategist at Bannockburn Global Forex.

Italy's banks could come to the rescue of Carige CRGI.MI to safeguard financial stability after BlackRock (NYSE: BLK ) dropped a planned bid for the struggling regional lender, UniCredit's chairman said. the chief executive of Italy's top retail bank, Intesa Sanpaolo ISP.MI , said it would not put any more money into an industry fund which could rescue Carige. the whole, European banks .SX7P dipped 0.1%, weighed down by some disappointing earnings.

Some investors exited positions in Austria's Raiffeisen Bank International (RBI) RBIV.VI and French lender Credit Agricole CAGR.PA as first quarter profit figures disappointed, sending their shares 3.7% and 2.6% lower, respectively. CYBG Plc CYBGC.L bucked the trend among lenders, rising 3.3% after swinging to a first-half profit. TKAG.DE dived 5%, nearing the price it opened at on Friday, when short-sellers rushed to cover their bearish exposure after the industrial conglomerate announced plans to spin-off its elevator business. EONGn.DE tumbled 5.8%, after Goldman Sachs (NYSE: GS ) downgraded the energy company's stock, which was also trading ex-dividend. STOXX 600 and auto and parts sub-sector rise on likely U.S. auto tariff reprieve