* FTSEurofirst 300 index up 0.6 pct
* Athens bourse falls, hit by ongoing political uncertainty
* Upbeat economic news lifts Madrid and Lisbon markets
* FTSE up but pares gains as UK external deficit rises
By Sudip Kar-Gupta
LONDON, Dec 23 (Reuters) - A fall in Greek stocks kept a lid on gains in European equities on Tuesday, as the Athens bourse was hit by the prospect of early elections that could put Greece's rescue package at risk.
The pan-European FTSEurofirst 300 index was up by 0.6 percent at 1,374.59 points going into the close of the trading session, with the index up 4.4 percent since the start of 2014.
European stocks were helped by positive economic news from Spain and Portugal.
The Bank of Spain raised its economic forecast while Portugal's budget deficit shrank to 4.3 percent of gross domestic product in the 12 months to the end of September from 4.8 percent a year earlier.
However, Athens' benchmark ATG equity index underperformed due to uncertainty over Greek politics. The ATG, which dropped nearly 20 percent in the second week of December, was down 1 percent.
The Greek parliament on Tuesday failed to elect a new president in a second-round vote. It has one more chance to do so next week to avert elections that could bring to power a party that wants to renegotiate the country's bailout deal, end years of austerity and write off some Greek debt.
Prime Minister Antonis Samaras, whose term is not due to end until mid-2016, has offered to bring pro-European independents into the government and hold elections by late next year if they support Stavros Dimas, the only candidate in the presidential race.
"With many analysts predicting that Greek MPs will fall short of the votes needed to support presidential candidate Stavros Dimas, more destabilisation could be on the way for Greece, and by extension, the euro zone," said Spreadex financial analyst Connor Campbell.
Across Europe, Britain's benchmark FTSE 100 was up by 0.4 percent, Germany's DAX rose 0.5 percent while France's CAC stood 1.3 percent higher.
Portugal's PSI-20 equity index outperformed to rise 1.5 percent after Portugal's budget deficit shrank, while Madrid's IBEX also advanced 0.7 percent after the Bank of Spain forecast faster economic growth.
However, the FTSE pared its earlier gains after data showed Britain's deficit with the rest of the world has risen to 27 billion pounds ($42 billion), equivalent to 6.0 percent of gross domestic product (GDP), matching the biggest deficit on record.
"The UK current account data has triggered some sell orders," said AvaTrade chief market analyst Naeem Aslam.
($1 = 0.6423 pounds)
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; Editing by Dominic Evans)