European shares up, Italy leads after election results

* Italy’s FTSE MIB outperforms as Renzi wins EU vote

* Pro-EU forces keep majority after European election

* French CAC lags, Germany’s DAX hits record high

* London, New York closed for public holiday

By Atul Prakash

LONDON, May 26 (Reuters) – European equities rose on Monday, with Italy’s FTSE MIB outperforming the regional stock market after voters endorsed Prime Minister Matteo Renzi’s centre-left Democratic Party’s reforms in European elections.

The FTSE MIB rose 2.7 percent, outpacing other major European indexes, boosted by gains in domestically focused banks including UBI Banca and BP Milano.

Germany’s DAX hit a record high of 9,876.10 points, before settling back to 9,859.53, a rise of 0.9 percent. The euro zone’s blue-chip Euro STOXX 50 index was up 0.7 percent at 1034 GMT.

First official results from around the 28-nation bloc showed pro-European centre-left and centre-right parties will keep control of around 70 percent of the 751-seat EU legislature, but the number of Eurosceptic members will more than double.

“Investors are obviously comfortable with the European election results which have been much better than many expected,” Naeem Aslam, chief market strategist at Ava Trade, said.

“Nevertheless, these elections are behind us and the main focus will be on June 5th meeting (of the European Central Bank). Investors are desperate to see some help from (ECB President) Mario Draghi and hoping that he will turn up with some sort of quantitative easing policies.”

The European Central Bank must be “particularly watchful” for any negative price spiral taking hold in the euro zone, Draghi said on Monday, adding that the bank was not resigned to inflation being too low for too long.

The London and New York markets were closed for a public holiday.

FRENCH ‘EARTHQUAKE’

In France, the anti-immigrant and anti-euro National Front party topped the vote, in what French Prime Minister Manuel Valls described as a political “earthquake.”

France’s CAC-40 lagged the overall market, edging up 0.3 percent.

Michel Juvet, chief investment officer at Swiss bank Bordier, said that while the rise of Eurosceptic parties could be unsettling for some, it could also put even more pressure on the European Central Bank to unveil measures next month to support the region’s economic recovery.

Expectations of new ECB action in June, including interest rate cuts, have helped prop up European stock markets.

Francois Savary, chief investment officer at Swiss bank Reyl, said that while the French EU vote result showed the country’s political difficulties, it should not affect the stock market too much, since many CAC companies make much of their money outside France.

“The EU vote says a lot about the difficulties that France is in. But we still have some great stocks and great export companies on the CAC-40,” said Savary.

Among individual sharp movers, Bull surged 21.5 percent on news Atos is to buy the company in an all-French IT sector deal worth 620 million euros ($ 845 million). The deal will create the top Europe-based cloud computing company. Atos shares were up 5 percent.

Of the fallers, Getinge lost 9.2 percent after the Swedish medical technology firm postponed a planned update to investors as a result of discussions with the U.S. Food & Drug Administration (FDA) related to quality issues at its Medical Systems unit.

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today’s European research round-up (Additional reporting by Sudip Kar-Gupta and Francesco Canepa; editing by Keiron Henderson)