Italy leads Europe shares higher, France lags in election aftermath

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

* Pro-EU forces keep majority after European election

* French CAC lags after National Front win

* Germany’s DAX briefly hits new record high

* London, New York closed for public holiday

By Sudip Kar-Gupta

LONDON, May 26 (Reuters) – European equities rose on Monday, with Italy’s FTSE MIB outperforming after Prime Minister Matteo Renzi’s centre-left Democratic Party’s reforms were endorsed by a strong showing in European elections.

The FTSE MIB rose 2.9 percent, outpacing other major European indexes, as domestically focused banks including as UBI Banca and BP Milano rallied.

Germany’s DAX – where the establishment also performed well – hit a record high of 9,876.10 points, before settling back to 9,867.92 points, a rise of 1 percent.

Initial election results from around the 28-nation bloc showed the pro-European centre-left and centre-right parties will keep control of around 70 percent of the 751-seat EU legislature.

The number of Eurosceptic European Parliament members will, however, more than double after stunning victories for nationalists in France and Britain in what was seen as a protest vote against austerity and unemployment.

France’s CAC-40 lagged the overall market, edging up 0.4 percent.

“The results are more important on the national and local level than on the broader EU front,” said Michel Juvet, chief investment officer at Swiss bank Bordier.

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.”

Bordier’s Juvet 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 impact 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.

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 Francesco Canepa; Editing by John Stonestreet)