* Madrid stock market rises after rebound in Spain economy
* Madrid outperforms dip in FTSEurofirst 300 index
* FTSEurofirst 300 down 0.2 pct, ESTOXX 50 up 0.2 pct
* Buy into any dip - Central Markets trader
By Sudip Kar-Gupta
LONDON, Jan 6 (Reuters) - Spanish stocks rose to outperformweaker European equity indexes on Monday, as signs of a reboundin the Spanish economy lifted the Madrid market.
Spain's IBEX benchmark equity index rose by 0.7percent in mid-session trading, making it the best-performingregional European market.
The IBEX outperformed a 0.2 percent dip in the pan-EuropeanFTSEurofirst 300 index as weak Chinese data weighed onworld stock markets.
France's CAC stock market underperformed by tradingflat, after a survey from data compiler Markit showed that acontraction in the French services sector had accelerated inDecember.
By contrast, Spain's service sector registered its fastestpace of growth in six-and-a-half years in December, fuellingoptimism the economy could expand more than expected in 2014.
Spain and Italy - another economy dubbed as a "peripheral"European market compared to the "core" of Germany and France -are slowly recovering from the euro zone's sovereign debtcrisis, and the rise in the IBEX also lifted Milan's FTSE MIB stock market by 0.6 percent.
Some traders and investors feel there is more value in those"peripheral" markets than the likes of France or Germany, withthe German DAX equity index having already hit recordhighs.
"There's a real swing in momentum towards economies such asSpain," said Scott Meech, co-head of European equities at UnionBancaire Privee (UBP).
Meech added that a decline in Spanish government bondyields, which fell to their lowest level since September 2010last week, also indicated growing investors' confidence towardsthe country.
"The Spanish bond yields are just shy of 4 percent, which isonly 80 basis points more than U.S. Treasuries," he said.
Clairinvest fund manager Ion-Marc Valahu also said he was"overweight" on the peripheral European markets.
"I'm overweight on the periphery, as opposed to France andGermany. There's still some value there," said Valahu.
Darren Courtney-Cook, head of trading at Central MarketsInvestment Management, said there may be some short-termpull-back on the European stock markets later this month asinvestors look to cash in gains after the region's strong finishto 2013.
The FTSEurofirst 300 rose 16 percent in 2013 to mark itsbest annual gain since 2009, while the Euro STOXX 50 index rose18 percent.
Courtney-Cook felt the Euro STOXX 50, which was up by 0.2percent at 3,079.22 points, could fall down to the 2,950 pointlevel over the next 2 weeks, but added that traders should useany such weakness to buy up stocks.
"There could be a pull-back, but you should buy into thatpull-back," he said.
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