* FTSEurofirst 300 down 0.4 pct, Madrid underperforms
* Spanish banks fall, bond yields highest in 1 week
* Bumper airline results boost Ryanair
LONDON, May 26 (Reuters) - European shares fell on Tuesday, the first day of the trading week for several markets after a long holiday, with a local-election battering for Spain’s government and Greece’s ongoing debt drama offsetting bumper airline results.
At 0749 GMT, the pan-Europe FTSEurofirst 300 was down 0.4 percent. Spanish banks were among the biggest underperformers, with shares of Popular, Sabadell and Caixabank down 1.8 to 2.2 percent.
Although Monday’s poor local election result for the Madrid government had already hit Spanish stocks on Monday, trading had been thin with bourses in London, Frankfurt and New York shut.
Tuesday also saw the first reaction to the vote from bond markets, with Spanish 10-year yields hitting their highest in nearly a week. The country’s ruling PP party suffered its worst defeat in over 20 years in local elections, reflecting voter discontent at four years of austerity.
“Markets are trying to digest what is going on in Spain and what it means for Greece,” said Michael Hewson, CMC Markets analyst. “Anti-austerity parties in Spain have been giving the incumbent government a kicking ... That’s keeping investors on the back foot.”
Greece’s volatile shares were higher despite the country’s ongoing stand-off with international creditors. Greece intends to make good on debt obligations but needs aid urgently to be able to do so, the government said on Monday.
A rise in profits after a bumper year for Ryanair propelled the airline’s stock almost 5 percent higher. Aer Lingus shares were also up after Ireland’s prime minister said the government would discuss the sale of its stake in the airline.
Shares of French telecoms group Altice fell more than 1 percent after bid rival Charter Communications neared an agreement to buy Time Warner Cable, people familiar with the matter said.
Italy’s Monte dei Paschi di Siena fell as much as 8 percent in early trade and were suspended from trading on the second day of the Italian bank’s 3-billion euro cash call. Trading in the rights to buy into the share issue was also halted.
Europe bourses in 2015: link.reuters.com/pap87v
Asset performance in 2015: link.reuters.com/gap87v
Today’s European research round-up
Editing by Andrew Heavens