* FTSEurofirst 300 closes down 0.8 pct at 1,357.51 points
* Lisbon and Milan stock markets hit by weak economic data
* FTSE MIB in biggest one-day fall since Feb 2013
* FTSEurofirst 300 retreats from 6-year highs
* DAX briefly hits record high but then closes down 1 pct
* Euro STOXX Volatility up 9.9 pct at 17.45 points
By Sudip Kar-Gupta
LONDON, May 15 News that the Portuguese and
Italian economies contracted in the first quarter hit shares in
Lisbon and Milan on Thursday, knocking back European stock
markets from multi-year highs.
Italy's FTSE MIB equity index finished 3.6 percent
lower, its biggest one-day fall since February 2013, while
Portugal's smaller PSI-20 benchmark index fell 2.7
They helped send the pan-European FTSEurofirst 300 index
down by 0.8 percent to 1,357.51 points, pushing it off a
six-year high of 1,372.81 reached earlier in the day.
The decline in economic output in Portugal and Italy from
the previous quarter contrasted with strong growth in Germany,
Europe's economic powerhouse, data showed.
Germany's solid performance briefly lifted the country's DAX
stock index to a record high of 9,810.29 points, but it
then retreated along with the broader European market, ending
the day down 1 percent at 9,656.05 points.
Since the start of 2014, the DAX has risen around 2 percent
- underperforming gains of 8 percent on the Italian FTSE MIB and
5 percent on Lisbon's PSI-20.
However, HED Capital head Richard Edwards preferred the
German equity market over that of southern European countries,
mainly because of Germany's better economic prospects.
"I would look to buy the DAX on dips and sell Spain, Italy
and Portugal on rallies," he said.
ECB RATE CUT?
Over the past week, European stock markets have been boosted
by increasing signs the European Central Bank (ECB) will cut
interest rates and announce other stimulus measures in June.
Both Berkeley Futures associate director Richard Griffiths
and Intertrader Chief Market Strategist Steve Ruffley said the
DAX could hit a record high of 10,000 points later this year, as
a weaker euro currency could help German exporters.
Yet other investors pointed to the mixed European economic
data on Thursday as highlighting the risk of a volatile stock
market environment over the coming months.
The Euro STOXX Volatility Index closed up 9.9
percent at 17.45 points, although it remained below its 2014
peak of 24.60 points.
The euro zone as a whole grew by just 0.2 percent in the
first three months of this year quarter-on-quarter, data showed,
lagging analysts' forecasts for a 0.4 percent expansion.
"This morning's unexpectedly weak euro zone GDP figure
prompts fresh fears for the area's recovery," said Saxo Capital
Markets UK chief executive officer Torben Kaaber.
"My view is that the ECB will eventually need to go ahead
with a stimulus package which will include interest rate cuts,
but it may be too little, too late," he added.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Blaise Robinson and Francesco Canepa;
Editing by Susan Fenton)