European shares roused by rally in retailers

* Metro (Other OTC: MTRAF - news) and Morrison lead rally in retail shares

* FTSEurofirst 300 up 1.4 pct at 1,375.76 points

* EDF (Paris: FR0010242511 - news) rises on new French nuclear reactor plans

* Greek ATG equity index up 3.3 pct as vote looms

* Italian presidency situation eyed by traders

By Sudip Kar-Gupta

LONDON, Jan 13 (Reuters) - Retail shares led European equities higher on Tuesday, with expectations of new economic stimulus measures from the European Central Bank also helping to prop up stock markets.

The STOXX Europe 600 Retail Index rose 2.9 percent, outperforming a 1.4 percent advance in the broader, pan-European STOXX 600 index and a similar rise in the pan-European FTSEurofirst 300 index.

German retailer Metro AG (Xetra: 725750 - news) climbed 4.5 percent after strong Christmas sales.

British supermarket operator Morrison also advanced 4.5 percent as investors welcomed the departure of chief executive Dalton Philips, who had presided over weak Christmas trading figures.

State-controlled French electricity and power group EDF rose 5 percent on French plans for new nuclear reactors, but the European oil and gas sector underperformed bigger gains elsewhere as oil prices hovered near six-year lows.

Traders said the low oil price would help retailers as theoretically it would give consumers more money to spend.

"The weaker oil price would put more money in consumers' pockets," said Andrea Williams, European equities fund manager at Royal London Asset Management.

GREECE AND ITALY EYED

Milan's FTSE MIB equity index rose 2 percent as Italy's borrowing costs hit new record lows on speculation the ECB could unveil plans for government bond purchases next week.

But some traders remained cautious about Italy given the imminent departure of Italian President Giorgio Napolitano.

"Italy is still in a phase of a very fragile economic recovery and the new president will have to play a key role to sustain the current coalition," said Carlo Alberto de Casa, senior analyst at ActivTrades.

Greece's benchmark ATG equity index, which fell around 30 percent in 2014, rose 3.3 percent as a Jan. 25 election looming.

The leftist Syriza party, which has said it will cancel austerity imposed under Greece's 240 billion euro ($283.3 billion) bailout and renegotiate some debts, leads in the polls, but some traders feel Greece will stay in the euro zone.

Rupert Welchman, European equities fund manager at Union Bancaire Privee, said that while he had reduced his holding of Greek shares, he did not want to be completely out of the Greek market in case it rallied after the election.

"During this long-running European crisis, we have been led to fear extreme outcomes time and again, and then the eventual outcome has been one of compromise," said Welchman.

($1 = 0.8472 euros) (Additional reporting by Blaise Robinson; Editing by Catherine Evans)