* Shares of British engineering co up 10.46% at 146.35p, after hitting an 18-month high of 146.8p
** Stock biggest gainer on UK blue-chip index, extends gains into eighth straight day
** Co said it agreed to sell its Spanish unit ITP Aero to a consortium led by Bain Capital Private Equity for 1.7 bln euros ($2.0 bln), helping it to hit its 2 bln pound target for its disposal programme.
** Shares were already up after co said earlier on Monday it was selected to provide engines for the U.S. Air Force B-52 Stratofortress bombers, in a contract that could be worth up to $2.6 bln.
** RR's F-130 engines were chosen for the replacement engines for the bombers, beating incumbent supplier Pratt & Whitney, part of U.S. company Raytheon
** Jefferies calls the contract win a good one for co
** Brokerage doesn't expect the announcement to make any significant change to consensus forecasts, but says it does provide "additional comfort" to longer-term consensus forecasts
** RR shares up ~19% this year, as of Friday's close
(Reporting by Tapanjana Rudra) ((Tapanjana.Rudra@thomsonreuters.com;))