* Agrees sale of Spain-based ITP for around 1.7 bln euros

* Buyer is Bain Capital Private Equity

* Deal means Rolls has hit 2 bln stg disposal target

* Shares soar 11%, highest level since March 2020

* Rolls also won U.S. Air Force B-52 contract

LONDON, Sept 27 (Reuters) - Rolls-Royce said it had agreed to sell its Spanish unit ITP Aero to a consortium led by Bain Capital Private Equity for 1.7 billion euros ($2 billion), helping the British engineering group hit its 2 billion pound target for disposals.

The sale, announced on Monday, sent Rolls-Royce shares soaring 11% to 148 pence, their highest level since March 2020 in the early weeks of the pandemic, on the view that recovery of Britain's most famous industrial name is underway.

Last year Rolls-Royce was floored by the COVID-19 pandemic as its airline customers stopped flying, resulting in a perilous few months before the company raised more cash and secured huge loans.

To repair its balance sheet, it announced a 2 billion pound disposal plan in August 2020, with ITP the biggest asset on the block.

The sale announced on Monday will help boost investor confidence in the group's recovery, and built on positive sentiment after Rolls beat competitor engine makers to win a contract to power the U.S. Air Force's B-52 bombers.

Rolls-Royce Chief Executive Warren East said the sale of ITP, a turbine blade maker based in the Basque region of Spain, was a "significant milestone" in the disposal program.

A spokesperson confirmed that the deal brought the group close to the 2 billion target.

"Today’s announcement effectively marks the end of the disposal program," said the spokesperson, adding: "We continually evaluate non-core assets in the portfolio and will always focus on maximizing shareholder value."

Rolls-Royce has also sold smaller assets including a stake in Air Tanker Holdings, its Bergen Engines unit in Norway, and a civil nuclear instrumentation and control business.

ITP will remain a supplier to Rolls-Royce after the sale, which Rolls said had been approved by its board but was still subject to regulatory clearances. The deal is expected to close in the first half of next year.

Bain Capital's consortium includes Spanish co-investors SAPA and JB Capital, and there is potential for further industrial partners to join the group, the statement said.

Rolls Royce said earlier on Monday that it had won a contract worth up to $2.6 billion to supply the U.S. B-52 bombers with replacement engines. Its U.S.-made F-130 engines will power the jets for an initial $500 million six-year deal.

($1 = 0.8537 euros) (Reporting by Sarah Young, Editing by Paul Sandle and Susan Fenton)