* FTSEurofirst 300 down 0.3 percent after late session dip
* Index closes just below its 50-day moving average
* Portugal shares rally as country seeks bailout
By Blaise Robinson
PARIS, April 7 (Reuters) - European stocks ended lower on Thursday, as a new earthquake and a tsunami alert in northeastern Japan sparked a late-session bout of profit taking, halting the market's brisk three-week rally.
The FTSEurofirst 300 index of top European shares closed 0.3 percent lower at 1,144.18 points, after rising to as much as 1,153.60 points in afternoon session. The index failed to stay above its 50-day moving average and ended just below the key support level, sending a bearish signal.
"The news broke the session's upside momentum, and with no detail yet on the extent of the damage, people used it as an excuse to take a bit of profit," said Lionel Jardin, head of institutional sales at Global Equities in Paris.
The earthquake of magnitude 7.4 shook the northeast of Japan and a tsunami warning was issued for the coast, already devastated by last month's massive quake and the tsunami that crippled a nuclear power plant.
Luxury stocks, still reeling from the first quake due to their strong exposure to Japanese consumers, took another beating on Thursday, with LVMH down 1.8 percent and Richemont down 1.9 percent. So far this year the stocks are down 9.1 percent and 4.4 percent respectively.
Shares in Portugal bucked the trend, with the country's PSI 20 index adding 1.2 percent after Lisbon's decision to seek a bailout as well as Spain's relatively successful bond auction helped ease fears that Portugal's debt woes would spread to other countries in the region.
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ECB in graphics: http://r.reuters.com/kah88r
Markets since ECB March meet: http://r.reuters.com/tej88r
Euro zone debt struggle: http://r.reuters.com/hyb65p
Euro zone credit ratings http://r.reuters.com/pyh48r
Timeline on Euro zone debt crisis in the last year:
http://link.reuters.com/xur78r
Bank exposure to Portuguese debt broken out by country
and type: http://r.reuters.com/puh78r
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Spain's IBEX 35 index, already outperforming all Europe's indexes in 2011 with a 10 percent rise, held steady on Thursday.
"Spain is the real 'swing factor' in this debt crisis and the fact that Spanish stocks outperform and the spread between the country's bond yields and Germany's Bund yields is tightening, despite both Portugal's bailout and the ECB rate, are signals that the fears over Spain are abating," said Roland Kaloyan, strategist, global asset allocation, global research and strategy at Societe Generale CIB.
As expected, the European Central Bank raised interest rates for the first time since the 2008 financial crisis on Thursday, but the bank's president Jean-Claude Trichet said the ECB had not decided if the hike was the first in a series.
Equity investors welcomed the ECB decision, which was not seen as the start of an aggressive tightening cycle.
"It's a strong message from the ECB on the need to return to more 'normal' monetary conditions. The strong euro, supported by the ECB's stance, will continue to boost foreign investors' appetite for European stocks," Kaloyan said. (Editing by Greg Mahlich)