* FTSE MIB outperforms after Italy consumer confidence rises
* German business sentiment drops for fifth straight month
* TNT slumps about 10 pct
By Sudip Kar-Gupta
LONDON, Sept 24 (Reuters) - The Milan stock exchange rose to outperform sluggish European equity markets on Wednesday after data showed that Italian consumer confidence had risen for the first time in four months.
Weak German economic data and tepid results from Dutch group TNT weighed on other European equities, though supportive comments from European Central Bank chief Mario Draghi gave some support.
Speaking in a French radio interview, Draghi said the ECB would keep monetary policy loose for as long as it took to push up inflation in the bloc from near zero towards the level of just under 2 percent targeted by the bank.
The pan-European FTSEurofirst 300 index was up by 0.2 percent at 1,377.12 points in late session trading.
Italian Prime Minister Matteo Renzi has repeatedly vowed to make economic reforms to revive his country's economy, and Milan's FTSE MIB equity index lifted 0.6 percent after Italian consumer confidence rose in September.
"The FTSE MIB could have a good performance towards the end of this year if Renzi is able to keep together his team," said Carlo Alberto de Casa, senior market analyst at ActivTrades.
Even though German business sentiment dropped for a fifth straight month in September to its lowest level since April 2013, many traders said expectations of new stimulus measures from the European Central Bank (ECB) were helping offset the impact of such negative economic data.
Gary Paulin, co-founding partner of equity brokerage Aviate Global, backed buying European banking shares to cash in on any rally that could be driven by new ECB stimulus measures.
"We would be adding to Italian banks. In terms of lending trends, Italy was the standout in the recent ECB lending survey and most are seeing upgrades," said Paulin.
Nevertheless, some weak corporate updates highlighted Europe's economic woes.
Dutch logistics company TNT Express tumbled roughly 10 percent after warning that low growth in Europe would hit margins in the third quarter. It also announced it was setting aside 50 million euros to settle an anti-competitiveness investigation by French authorities.
Traders said that air strikes by the United States and its Arab allies against militant groups in Syria were giving investors a further reason to trim equity positions and cash in.
The FTSEurofirst 300 hit a peak of 1,410.93 points this month - its highest since early 2008 - and the index remains up by about 4 percent since the start of 2014.
"I'm strongly bearish coming into Q3. We've had a big push up, but people are now taking some chips off the table," said Darren Courtney-Cook, head of trading at Central Markets Investment Management.
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 Francesco Canepa and Blaise Robinson; Editing by Andrew Heavens)