* Italian and Spanish stock markets fall
* Traders cite concerns over European elections this week
* Rising demand for protection in case FTSE MIB falls
* FTSEurofirst 300 closes up 0.1 pct at 1,366.29 points
* Raiffeisen rallies after Q1 results
By Sudip Kar-Gupta
LONDON, May 22 Italian and Spanish stocks
underperformed firmer equity markets elsewhere in Europe on
Thursday, as traders said concerns about this week's European
Parliament elections were weighing on Milan and Madrid.
Italy's FTSE MIB equity index closed down by 1.1
percent, while Spain's IBEX stock market fell 0.1
Both underperformed the pan-European FTSEurofirst 300 index
, which edged up 0.1 percent to 1,366.29 points - still
in sight of a six-year high of 1,372.81 points set last week.
Germany's DAX also rose 0.2 percent.
Analysts say the European election results could undermine
some euro zone governments.
In Greece, a strong showing by anti-bailout parties may hurt
an already-fragile coalition, potentially paving the way to
national elections. In Italy, a poor result for Prime Minister
Matteo Renzi's party might weaken his drive for the swift
reforms he promised when he took power in a party coup.
Yields on Spanish and Italian bonds stabilised on Thursday.
Yet demand to protect against falls in Italian shares has
risen sharply in the past week as investors fear that a strong
showing for the Eurosceptic 5-Star Movement may weaken Renzi's
Some investors also remained concerned about the gap between
Germany - Europe's economic powerhouse - and weaker southern
European states such as Spain, Portugal and Italy. A purchasing
managers' survey on Thursday showed Germany's private sector
expanded steadily this month, whereas data last week showed a
contraction in the Italian economy.
The European Central Bank may unveil measures next month to
help the euro zone economy, such as a rate cut, which would keep
the euro currency in check.
However, some traders say any ensuing fall in the euro may
still not be enough to help weaker economies such as Spain and
"Economic prospects rarely determine which way stock markets
will go but the situation in southern Europe is now so dangerous
for all business there that these times may be an exception,"
said HED Capital head Richard Edwards.
"Keep selling rallies," he added.
Austria's Raiffeisen Bank was the best-performing
stock on the FTSEurofirst 300 index. It rose 6 percent after
posting first-quarter profits that exceeded market expectations.
Raiffeisen also said it could soon pay back nearly 2 billion
euros ($2.73 billion) in state aid.
The broad rally in European equities since the start of 2014
has been maintained by expectations of new European Central Bank
stimulus measures, and by corporate takeover activity.
The FTSEurofirst 300 has gained around 4 percent this year.
Italy's FTSE MIB is up around 7 percent, Spain's IBEX has risen
6 percent, outperforming a rise of around 2 percent on the DAX.
($1 = 0.7318 Euros)
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 Francesco Canepa; Editing by Larry
King and Andrew Heavens)