(Updates prices after market close)
* FTSEurofirst 300 dips 0.1 pct
* Portugal's PSI rises 1.1 pct, boosted by BCP, BES
* Hugo Boss falls after share placement
* Ahold down after below-forecast profit
By Francesco Canepa
LONDON, May 28 (Reuters) - Portuguese shares outperformed mostly flat European equities on Wednesday, bolstered by reassuring signs from the country's largest listed banks.
Most other leading European indexes traded flat or slightly lower, though still close to multi-year highs, with declines by fashion brand Hugo Boss and consumer group Ahold weighing on the pan-European FTSEurofirst 300 .
Lisbon's PSI 20 index, however, rose 1.1 percent. The country's second-largest bank, Millennium bcp, gained 4 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 (ECB) 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 3.9 percent.
The broader FTSEurofirst 300 index of top European shares closed 0.1 percent lower at 1,377.83 points 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 of more policy easing by the ECB.
The MSCI Europe index of European shares has risen about 20 percent in the past year despite falling profit expectations, leaving it trading at around 14 times expected earnings for the next 12 months, the highest multiple since 2005, Datastream data showed.
Dutch supermarket chain Ahold slipped 3.3 percent to feature among the top FTSEurofirst fallers 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 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 2.5 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.
On the positive side, Telecom Italia rose 4 percent after Goldman Sachs raised its price target for the stock by more than 50 percent and reaffirmed its "buy" rating. The shares helped Italy's FTSE MIB index close 0.9 percent higher.
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 Atul Prakash; Editing by Larry King and David Goodman)