European shares post best weekly streak since 2014

* STOXX posts 0.5 percent gain on the week

* European shares down 0.3 pct on the day

* Oil index up 14 percent year-to-date

* Richemont hit by disappointing update, Ubisoft up (Updates with closing prices, quotes)

By Danilo Masoni and Julien Ponthus

MILAN/LONDON, May 18 (Reuters) - European shares ended down on the day on Friday but posted their eighth straight week of gains thanks to a rally in energy shares and despite concerns about Italian anti-establishment parties promising to increase state spending in a planned new government.

The pan-European STOXX 600 index fell 0.3 percent but remained near its highest level in more than three months and was up 0.5 percent on the week.

"Profit-taking has set in after a strong run this week, with investors keen to lock in some gains ahead of the weekend," said CMC Markets (LSE: CMCX.L - news) analyst David Madden. "The positive trend in European equity markets in recent weeks has been restored, and the bullish sentiment could be set to continue next week."

The last time the STOXX rose eight weeks in a row was in May 2014. After a turbulent start of the year, equities in Europe have been buoyed by a surge in crude oil prices to $80 which has prompted investors to add exposure to the energy sector.

The oil and gas index is up more than 14 percent year to date, comfortably leading sectoral gainers in Europe. On Friday shares in the sector were taking a breather with oil majors Eni (LSE: 0N9S.L - news) , Royal Dutch Shell (LSE: 0LN9.L - news) and Total (LSE: 524773.L - news) flat to down 0.5 percent.

The drop in the euro against a surging dollar has also helped ease worries that currency headwinds could erode the earnings of export-oriented companies. The weaker euro prompted Kepler to upgrade German equities earlier this month.

Italy's FTSE MIB however suffered another day of losses. It fell 1.5 percent as investors grew wary that a government accord between two anti-establishment parties could reduce fiscal discipline in the euro zone's third largest economy.

Italian Banks, considered a proxy for political risk in the country due to their government bond holdings, took the biggest hit with the sector index losing 3.1 percent.

Italy's 10-year government bond yield climbed 10 basis points (bps) to 2.22 percent, its highest level since last October.

Elsewhere, earnings updates were behind the biggest moves.

Richemont fell 5.2 percent after the luxury goods group posted a net profit that fell short of expectations, partly due to buying back inventory, and said it could target strategic investments and divestments.

"We see the higher-than-expected inventory buybacks, slight miss on underlying EBIT and lower-than-expected dividend as being slightly disappointing," UBS (LSE: 0QNR.L - news) analysts said.

A solid update from Ubisoft sent shares in the France's biggest video game maker to a record high with a 4.47 percent rise. (Reporting by Danilo Masoni Editing by Alison Williams and David Stamp)