* FTSEurofirst 300 closes down 0.8 pct at 1,357.51 points
* Lisbon and Milan stock markets hit by weak economic data
* FTSE MIB in biggest one-day fall since Feb 2013
* FTSEurofirst 300 retreats from 6-year highs
* DAX briefly hits record high but then closes down 1 pct
* Euro STOXX Volatility up 9.9 pct at 17.45 points
By Sudip Kar-Gupta
LONDON, May 15 (Reuters) - News that the Portuguese and Italian economies contracted in the first quarter hit shares in Lisbon and Milan on Thursday, knocking back European stock markets from multi-year highs.
Italy's FTSE MIB equity index finished 3.6 percent lower, its biggest one-day fall since February 2013, while Portugal's smaller PSI-20 benchmark index fell 2.7 percent.
They helped send the pan-European FTSEurofirst 300 index down by 0.8 percent to 1,357.51 points, pushing it off a six-year high of 1,372.81 reached earlier in the day.
The decline in economic output in Portugal and Italy from the previous quarter contrasted with strong growth in Germany, Europe's economic powerhouse, data showed.
Germany's solid performance briefly lifted the country's DAX stock index to a record high of 9,810.29 points, but it then retreated along with the broader European market, ending the day down 1 percent at 9,656.05 points.
Since the start of 2014, the DAX has risen around 2 percent - underperforming gains of 8 percent on the Italian FTSE MIB and 5 percent on Lisbon's PSI-20.
However, HED Capital head Richard Edwards preferred the German equity market over that of southern European countries, mainly because of Germany's better economic prospects.
"I would look to buy the DAX on dips and sell Spain, Italy and Portugal on rallies," he said.
Over the past week, European stock markets have been boosted by increasing signs the European Central Bank (ECB) will cut interest rates and announce other stimulus measures in June.
Both Berkeley Futures associate director Richard Griffiths and Intertrader Chief Market Strategist Steve Ruffley said the DAX could hit a record high of 10,000 points later this year, as a weaker euro currency could help German exporters.
Yet other investors pointed to the mixed European economic data on Thursday as highlighting the risk of a volatile stock market environment over the coming months.
The Euro STOXX Volatility Index closed up 9.9 percent at 17.45 points, although it remained below its 2014 peak of 24.60 points.
The euro zone as a whole grew by just 0.2 percent in the first three months of this year quarter-on-quarter, data showed, lagging analysts' forecasts for a 0.4 percent expansion.
"This morning's unexpectedly weak euro zone GDP figure prompts fresh fears for the area's recovery," said Saxo Capital Markets UK chief executive officer Torben Kaaber.
"My view is that the ECB will eventually need to go ahead with a stimulus package which will include interest rate cuts, but it may be too little, too late," he added.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Additional reporting by Blaise Robinson and Francesco Canepa; Editing by Susan Fenton)