Portugal's banks help it outperform mostly flat European stock markets

* FTSEurofirst 300 dips 0.3 pct

* Portugal's PSI rises 1 pct, boosted by BCP, BES

* Hugo Boss (Other OTC: BOSSY - news) falls after share placement

* Ahold (Amsterdam: AH.AS - news) down after below-forecast profit

By Francesco Canepa

LONDON, May 28 (Reuters) - Portuguese shares outperformed mostly weaker European equities on Wednesday, bolstered by reassuring signs from the country's largest listed banks.

Most other major European indexes traded flat or slightly lower, while remaining close to multi-year highs. Declines by fashion brand Hugo Boss and consumer group Ahold weighed on the pan-European FTSEurofirst 300.

Lisbon's PSI 20 index, however, rose 1 percent. The country's second-largest bank, Millennium bcp, gained 3.5 percent after announcing it had repaid state loans held in contingent convertible bonds (CoCos).

The move, which had to be approved by Portugal's central bank, was interpreted as a sign of confidence in the bank's health before the European Central Bank's asset-quality review (AQR).

"It shows BCP is in a comfortable situation," said Andre Rodrigues, an analyst at Caixa Banco de Investimento. "It means that the central bank of Portugal considers that BCP has enough capital, not only to repay those 400 million euros of CoCos but also to pass the AQR test."

Rodrigues also welcomed a successful placing of subscription rights in Portugal's largest bank, BES, as part of a 1.045 billion euro capital increase. Shares in BES jumped 4.2 percent.

The broader FTSEurofirst 300 index of top European shares was off 0.3 percent at 1,375.60 points by 1416 GMT, after hitting its highest level in more than six years on Tuesday.

The index has been supported by an improvement in economic data from the United States and expectations for more policy easing by the ECB.

The MSCI Europe index of European shares has risen around 20 percent in the past year despite falling profit expectations, leaving it trading at around 14 times its expected earnings for the next 12 months, the highest multiple since 2005, Datastream data showed.

Dutch supermarket chain Ahold slipped 3.8 percent to the bottom of the FTSEurofirst after reporting lower margins in the United States and the Netherlands, its main markets.

"Equities are clearly not that cheap anymore," Gerhard Schwarz, head of equity strategy at Baader Bank (Xetra: BWB.DE - news) in Munich, said.

"We might face some headwinds going forward as earnings expectations for the second half are too ambitious and could be revised down and economic growth might moderate next year."

Shares in fashion group Hugo Boss fell 2.7 percent to 103 euros. Private equity group Permira has placed a 5.6 percent stake in the fashion group with institutional investors at 101.50 euros apiece, a source familiar with the transaction said.

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 Atul Prakash; Editing by Larry King)