Russian turmoil knocks back European equities

* FTSEurofirst 300 down 0.8 pct, halts Tuesday's rebound

* Hard-hit Greek bourse up as new political vote looms

* Fears about Russia financial turmoil peg back stocks

By Sudip Kar-Gupta

LONDON, Dec (Shanghai: 600875.SS - news) 17 (Reuters) - European shares fell on Wednesday, reversing part of Tuesday's recovery, as a new drop in oil prices and financial turmoil in Russia hit the region's main stock markets.

However, the hard-hit Greek market bounced up ahead of a tight parliamentary vote that will trigger elections unless the Greek Prime Minister can win backing from independents and smaller parties that have so far rejected helping his coalition.

This week's slump in the Russian rouble has revived memories of 1998, when the rouble collapsed and sparked a sell-off in European equities. Germany's DAX, which has many companies that export to Russia, plunged nearly 40 percent in 2 1/2 months during the 1998 crisis.

Brent crude oil also traded below $60 a barrel on Wednesday, near 5-1/2 year lows, as major oil producers signalled they would maintain output despite a supply glut and faltering demand in Russia and Europe.

"The attack this week on the rouble has been quite violent, and the market is now pricing in a recession in Russia next year," said Arnaud Scarpaci, fund manager at Montaigne Capital.

Scarpaci said he would avoid companies with strong ties to Russia, such as German retailer Metro (Other OTC: MTRAF - news) , Finnish tyre maker Nokian and French bank Societe Generale (Paris: FR0000130809 - news) , until the situation in Russia stabilised.

Shares (Berlin: DI6.BE - news) in Austria's Raiffeisen Bank, which relies heavily on the Russian market for profits and has fallen by more than 50 percent so far this year, also touched record lows.

Raiffeisen was among the worst-performing stocks on the pan-European FTSEurofirst 300 blue-chip index, which fell 0.8 percent after a 1.9 percent bounce on Tuesday. The index has slumped by some 7 percent since early December.

The euro zone's blue-chip Euro STOXX 50 index also retreated by 1.2 percent to 3,013.54 points.

GREEK MARKET EDGES UP

However, Athens' main ATG equity index - which fell by around 20 percent in three days last week - outperformed to rise 3.3 percent.

Greek Prime Minister Antonis Samaras faces the first of three rounds of a presidential vote on Wednesday that will determine whether the country is forced into snap national elections and a new period of political chaos.

Samaras' conservative-leftist coalition is almost certain to fail in the first round, when it needs the support of 200 lawmakers in the 300-seat chamber to elect its nominee, Stavros Dimas.

But the backing that his coalition, which controls 155 deputies, collects will be closely watched as a sign of momentum for or against it, before a final, decisive vote on Dec. 29.

Failure to elect a president with a three-fifths majority in parliament triggers early elections, which polls show would probably be won by the radical leftist Syriza party that promises to axe the bailout scheme Greece uses to keep afloat.

"Greece will be subject to a period of uncertainty until the election is complete and even then a Syriza win could lead to more questions than it answers," said Kerry Craig, global market strategist at JP Morgan Asset Management.

"The party wishes to stay within the euro zone, yet renegotiate the terms of the bailout program and strategy to exit from it. But European leaders are likely to insist that they stick to the current terms," added Craig.

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 Blaise Robinson; Editing by Ralph Boulton)