European shares at six-year high, buoyed by Spain

* FTSEurofirst 300 rises to six-year high

* Euro STOXX 50 also rise

* Spain gets boost from Moody's

* Volkswagen (Other OTC: VLKAF - news) , HSBC cap gains

By Joshua Franklin

LONDON, Feb 24 (Reuters) - Demand for Spanish equities

helped European shares to six-year highs on Monday, but

weaker-than-expected results from HSBC and a disappointing

outlook from Volkswagen capped the gains.

Spanish stocks rose 1.2 percent after Moody's raised

Spain's sovereign debt rating one notch to Baa2 with a

"positive" outlook. Sentiment was also lifted by

data that showed German business morale rose in February to its

highest level since July 2011.

European stocks have risen sharply over the past 2-1/2

weeks, with the CAC-40 hitting a 5-1/2-year high on Friday,

boosted by hopes the region's economy and corporate profits will

recover this year.

"The outlook for corporate earnings, helped first by exports

and now by a recovery in domestic demand, is improving," said

Ann Steele, European equity fund manager at Threadneedle

Investments. "Consumer confidence on the continent is on the up,

and countries that have been most prepared to undergo difficult

reform are reaping benefits in terms of GDP growth."

The pan-European FTSEurofirst 300 closed up 0.6

percent at 1,351.65 points, the highest closing price since May

2008. The euro zone's blue-chip Euro STOXX 50 index

finished up 0.8 percent at 3,157.31 points.

British mobile operator Vodafone rose 4 percent.

Vodafone's shares have gained on the prospect of one of the

largest capital returns in corporate history, after it sells its

stake in U.S. mobile-phone company Verizon Wireless.

Slowing the rally, shares in HSBC fell 2.8

percent. Europe's largest bank posted results that fell short of

expectations and warned of more volatility in emerging

markets.

The drop was even sharper for Volkswagen, which

sank 9.2 percent after it issued a disappointing 2014 outlook

and announced plans for what some considered a generous buyout

of truck maker Scania (Other OTC: SVKBY - news) 's minority shareholders, sending

shares in the latter up 31.9 percent.

Worries brewing over credit restrictions on China's property

sector also kept investors on edge.

Mining (LSE: MIR.L - news) shares, which have a big exposure to resource-hungry

China, retreated, with Rio Tinto (Xetra: 855018 - news) down 1.8 percent and

Anglo American (LSE: AAL.L - news) down 1.7 percent.

Around Europe, UK's FTSE 100 index was up 0.4

percent, lagging continental indexes. Germany's DAX

gained 0.5 percent and France's CAC 40 rose 0.9 percent.

"The prospect of a pick-up in growth in the euro zone has

been one of the big catalysts for the market in the past few

weeks," said Vincent Ganne, analyst at derivatives broker FXCM (NYSE: FXCM - news) .

"With a lot of data coming out this week, including Friday's

inflation figures, fund managers' risk appetite will be tested.

We need more positive news, otherwise investors will start

having doubts."

Europe bourses in 2014:Asset performance in 2014:Today's European research round-up