BUY OR SELL-Are gains for Millennium BCP sustainable?

* Millennium stock outperformed European banks

* Faces weak markets, possible cash call-sell side

* Recovery seen helping 2010 earnings, stock value-buy side

* Q3 results due Nov. 11

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By Sergio Goncalves

LISBON, Oct 26 (Reuters) - Shares in Portugal's leading listed bank, Millennium bcp (BCP.LS), have gained more than 40 percent in the last four months as investors took heart from improved capital ratios and cost-cutting.

The rise began after the bank issued 300 million euros ($450.2 million) in perpetual bonds to boost its core Tier 1 capital ratio to 6.2 percent from 5.5 percent.

Millennium shares, which are trading around 1 euro, have outperformed the DJ Stoxx European bank index .SX7P, which has gained 30 percent since June. Is the rise sustainable?

SELL - FACES WEAK MARKETS, POSSIBLE CASH CALL

UBS has a price target of just 0.5 euro on the stock, compared with a 1 euro market price, and a "sell" recommendation on concerns Millennium may have to carry out a capital increase due to liabilities on its pension funds and low capital ratios at its Polish unit, Millennium BIGW.WA.

Millennium carried out a rights issue worth 1.3 billion euros in April 2008 and has rejected a further capital increase.

Sergio Gamez, an analyst at Bank of America-Merrill Lynch, has added Millennium recently to his 'least preferred list,' with a price target of 0.73 euro per share.