Russia-exposed stocks boosted by hopes of sanctions shift - traders

(Adds quotes, detail)

LONDON, Nov 18 (Reuters) - Some European stocks with business in Russia outperformed on Wednesday, with traders citing the possibility that closer co-operation between Moscow and the West over fighting Islamic State in Syria might lead to sanctions being lifted.

However, diplomats and some investors remained sceptical, saying that a recent thaw in relations wouldn't necessarily change the West's stance on sanctions for Russia, which were imposed after dispute over Ukraine.

Retailer Metro, pharmaceutical firm Stada and Raiffeisen Bank were up 2-3 percent, outpacing the STOXX 600, which fell 0.3 percent.

Traders cited the companies as likely to benefit should France, the United States and their allies decide to ease sanctions against Russia. The current set of measures expires in January.

The rouble has rallied this week, helped by expectations Russia may benefit from a thaw in East-West relations after Friday's attacks by Islamic State militants in Paris.

However, other companies with substantial sales in Russia, including Carlsberg (Other OTC: CABGY - news) , Renault (Swiss: RNO.SW - news) and Nokian Tyres, missed out on the rally.

"I don't think you can extrapolate too much from the slightly improved relationship in terms of a commitment to tackle (Islamic State)," said James Butterfill, head of research & investment strategy at ETF Securities.

"It (Other OTC: ITGL - news) might defrost the relationship between the West and Russia, and perhaps that's what markets are pricing. But to extrapolate that sanctions will be lifted is going too far."

The official EU position on sanctions is unchanged. The deadline for implementation of the Minsk peace deal for Ukraine is Dec 31 and EU leaders will discuss progress on implementation before the end of the year.

"At this stage, we expect sanctions to be rolled over for another six months at the end of January," said one senior EU official. (Reporting by Alistair Smout, Additional reporting by Robin Emmott in Brussels and Danilo Masoni in Milan; editing by John Stonestreet and Dominic Evans)