Greek relief lifts Europe shares, rally seen limited

* FTSEurofirst reaches highest intraday peak since mid-May

* FTSEurofirst and Euro STOXX 50 index up 0.7 percent

* Greek bank stocks up 14 pct

* Traders caution that rally set to be limited

By Sudip Kar-Gupta

LONDON, June 18 (Reuters) - European shares rose to their highest level in about a month on Monday after a victory for pro-bailout parties in Greece eased fears of a sudden Greek exit from the euro zone, although traders warned the rally may be short-lived.

The FTSEurofirst 300 index reached an intraday high of 1,004.58 points in early morning trade - its highest point since May 15.

The index was up 0.7 percent at 1,000.02 points by 0750 GMT. The Euro STOXX 50 index was up by 0.8 percent, while Germany's DAX and France's CAC-40 both rose by around 1 percent.

Parties committed to keeping Greece in the euro zone, and which back a bailout deal imposed on it by the European Union and International Monetary Fund, won a slim parliamentary majority on Sunday that nixed some imminent fears of a Greek exit from the euro.

However, concerns remain over Spain's sovereign debt problems, and that fresh contagion may infect Spain further and spread to fellow debt market struggler Italy.

Spain's IBEX stock market was down by 0.1 percent while Italy's FTSE MIB equity index rose 0.1 percent - underperforming the broader market rebound.

"We don't see this rally holding out at all. Our view is still that Greece will at some stage default, and we will still be looking to sell into the rallies," said JN Financial senior trader Adrian Redmond.

GREEK BANK STOCKS REBOUND

Greek banking stocks, which have plummeted in recent weeks, also rose sharply, gained some 14 percent while Athens' benchmark stock index rose 6.1 percent.

However, analysts again cautioned that the overall political picture in Greece remained uncertain, with the radical left SYRIZA bloc vowing to continue its opposition to the painful austerity measures demanded of Greece.

"I'm not convinced that much has changed in Greece. Chasing the markets higher at the moment would not be the best way to play it," said Central Markets chief strategist Richard Perry.

Citigroup added in a research note that its forecast for a possible Greek exit from the euro zone remained unchanged in the range between 50-75 percent over the next 12 to 18 months.

Perry said the German DAX could encounter selling pressure at around the 6,400 point level, and Argonaut Capital Partners' Barry Norris said it remained too risky to buy into southern European equities and European bank stocks for now.

"After the initial relief, markets are likely to realise this Greek election result is unlikely to be a significant turning point. Southern Europe and Eurozone banks remain too risky," said Norris, whose firm manages around 1 billion euros worth of assets. (Reporting by Sudip Kar-Gupta; Editing by Toby Chopra)