* Raiffeisen, Metro fall after sanctions on Russia
* FTSEurofirst 300 down 0.4 pct
* Fiat rises on media report of Volkswagen bid interest
* Banco Espirito Santo back down on ratings cuts
By Sudip Kar-Gupta
LONDON, July 17 (Reuters) - European stock markets fell on Thursday as new Western sanctions on Russia and some weaker-than-expected corporate results dented investors' appetite for equities.
Stocks with high exposure to Russia were among the top fallers after the European Union and the United States increased sanctions over what Washington says is Moscow's failure to curb violence in Ukraine.
Among stocks exposed to Russia were Austrian bank Raiffeisen , which fell 3.1 percent, while German retailer Metro shed 2 percent and Italy's Unicredit declined by 1.3 percent.
The STOXX Europe 600 Oil & Gas Index also fell 0.7 percent. Energy companies are likely to feel the impact of the sanctions because Europe imports much of its oil and gas from the region.
"The Russia sanctions are having a bit of an impact on the European markets. We're entering into a mildly bearish phase. The financials and natural resources companies could be squeezed a bit," said Mike Turner, European equity derivatives broker at XBZ Ltd.
The pan-European FTSEurofirst 300 index fell 0.4 percent to 1,371.29 points, slipping back after rising 1.3 percent the previous day. The euro zone's blue-chip Euro STOXX 50 index also fell 0.5 percent to 3,188.63 points.
Portuguese bank Banco Espirito Santo, which has been hit by financial problems at the holding company of the bank's founding family, slumped 6.6 percent after suffering credit rating cuts.
However, carmaker Fiat bucked the weaker markets to rise by 2.2 percent, after German monthly Manager Magazin reported Volkswagen was interested in buying Fiat.
Both VW and Fiat denied the report, while a person familiar with the situation told Reuters that VW would more likely bid for Fiat assets such as Magnetti or Alfa Romeo rather than the entire company.
Atif Latif, director of trading at Guardian Stockbrokers, saw any declines in the European markets, which hit multi-year highs in June, as short-lived with many investors expecting economic stimulus measures from the European Central Bank to support equities towards the end of 2014.
"The market overall, given the largest rally in 3 months, will see some natural profit taking today," said Latif.
"Overall the market remains in good shape for a move higher after this consolidation phase," he said, adding buyers were re-entering the market when prices weakened.
For a list of companies with high exposure to Russia, please click on:
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 Alistair Smout; Editing by Janet Lawrence)