* FTSEurofirst 300 up 0.1 pct, ESTOXX 50 up 0.2 pct
* Peripheral European markets outperform France and Germany
* ECB to keep accommodative monetary policy
* French CAC falls but Spanish and Italian markets rise
By Sudip Kar-Gupta
LONDON, Jan 9 (Reuters) - A rise in Europe's smaller "peripheral" markets nudged the region's equities to new five-and-a-half year highs on Thursday, with the Spanish and Italian bourses outperforming Germany and France.
The pan-European FTSEurofirst 300 index was up by 0.1 percent at 1,322.91 points in late session trading, reaching its highest level since mid-2008.
The euro zone's blue-chip Euro STOXX 50 index advanced 0.2 percent to 3,118.25 points, its highest level since late 2008.
European equities were supported by comments by European Central Bank (ECB) head Mario Draghi, who said it was determined to use all available tools to prevent inflation from falling too low.
"As we enter 2014, we believe the European equity market is likely to continue the positive trajectory of 2013 with better growth and accommodative policy from the ECB supporting the economic recovery and, as a result, risk assets," said Andrew Arbuthnott, head of large-cap European equities at Pioneer Investments.
"This improved sentiment means we are also seeing more international investors return to the market providing additional support to the asset class," he added.
The ECB's pledge to do "whatever it takes" to protect the euro currency from the effects of the bloc's sovereign debt crisis has enabled European equities to rally over the last 2 years, with the FTSEurofirst 300 rising 16 percent in 2013.
It also enabled "peripheral" markets such as Spain and Italy - which were among the hardest hit by the debt crisis - to recover and some investors felt those markets could be a better bet for 2014 than the "core" of France and Germany.
"It's in the southern euro zone that the upside potential remains the biggest," said Regis Begue, head of equities at Lazard Freres Gestion.
Economic data this week has shown signs of a recovery in Spain, whose borrowing costs have also fallen.
Bumper demand for Ireland's first bond sale since it completed an international bailout has also helped push down euro zone government bond yields and lifted expectations that Portugal will similarly be able to exit its bailout programme this year as planned.
Spain's IBEX rose 0.6 percent, Italy's FTSE MIB advanced by 1.2 percent. Portugal's PSI equity index rose 0.9 percent while Ireland's ISEQ equity index climbed 1.7 percent.
All those markets beat a flat performance on Germany's DAX , which has already hit record highs, and a 0.2 percent fall on France's CAC stock market.
The CAC was dented by a 3.9 percent slide at telecoms network equipment company Alcatel-Lucent, which fell after Deutsche Bank cut its rating on the stock to "hold" from "buy".
The French economy has also underperformed Germany, while a French official warned on Thursday that the country's debt load was now in the "danger zone", and FXCM analyst Vincent Ganne said traders were betting on more declines on the CAC versus gains in Spain and Italy.
"The momentum is clearly in the peripheral markets, that's where investment flows are going," he said.