STOCKS NEWS EUROPE-Popolare Milano lifted by Q1 results

Shares in Italian co-operative bank Banca Popolare di Milano (Milan: PMI.MI - news) rise more than 5 percent to lead Milan's blue-chip gainers, lifted by stronger-than-expected quarterly results and capital strengthening expectations.

Analysts say revenues, especially commission income, and operating costs have beaten market expectations.

Broker Equita writes in a note that disappointing write-downs and bad loans should be more than offset by higher chances the Bank of Italy removes larger risk-weights to calculate its capital ratios following a capital increase.

Equita lifts its target price on the stock to 0.80 euros from 0.78 euros, saying the lender is becoming the co-operative bank with the most attractive risk/reward profile.

Popolare Milano is raising 500 million euros ($687.82 million) in a rights issue that runs until May 23.

($1 = 0.7269 Euros)

Reuters messaging rm://andrea.mandala.thomsonreuters.com@reuters.net