* STOXX set for 0.5 percent gain on the week
* Oil index up 14 percent year-to-date
* Richemont hit by disappointing update, Ubisoft up(Adds details, updates prices)
By Danilo Masoni
MILAN, May 18 (Reuters) - European shares dipped in morningtrading on Friday but were on course for eight straight weeks ofgains, supported by a rally in energy shares and a weaker euro,which helped investors shrug off worries over Italy.
The pan-European STOXX 600 index fell 0.3 percentby 0827 GMT but remained near its highest level in more thanthree months and was up 0.5 percent on the week, while the FTSEfell 0.2 percent from a record close on Thursday.
The last time the STOXX rose eight weeks in a row was in May2014. After a turbulent start of the year, equities in Europehave been buoyed by a surge in crude prices to $80 which hasprompted investors add exposure to the energy sector.
"Within our positive view on overall commodities, we remainneutral on energy. We prefer to gain exposure through energyequities, which have positive cash flows and efficient cashmanagement," the Investment Strategy Department of Credit Suissesaid in a note.
The oil and gas index is up more than 14 percentyear to date, comfortably leading sectoral gainers in Europe. OnFriday shares in the sector were taking a breather with sharesin oil majors Eni, Royal Dutch Shell and Totaltrading down between 0.5 and 0.9 percent.
The drop in the euro against a surging dollar has alsohelped ease worries that currency headwinds could erode earningsfor export oriented companies. The weaker euro prompted Keplerupgrade German equities earlier this month.
Italy's FTSE MIB, down 0.2 percent, however haslagged and was set for its second straight week of losses asinvestors grew wary that a government accord between twoanti-establishment parties could reduce fiscal discipline in theeuro zone's third largest economy.
Enel fell 0.6 percent after Goldman Sachs removedthe Italian state-controlled utility from its list of favouritestocks, saying the energy policy plans of the 5-Star and Leagueparties could dent prices.
Italian banks, considered a proxy for political risk in thecountry due to their government bond holdings, and utilities areseen as most exposed to government polices, while exporters areconsidered relatively safer.
Elsewhere, earnings updates were behind the biggest moves.
Richemont fell 7.7 percent after the luxury goodsgroup posted a net profit that fell short of expectations,partly due to buying back inventory, and said it could targetstrategic investments and divestments.
"We see the higher-than-expected inventory buybacks, slightmiss on underlying EBIT and lower-than-expected dividend asbeing slightly disappointing," UBS analysts said.
A solid update from Ubisoft sent shares in theFrance's biggest video game maker to a record high.(Reporting by Danilo MasoniEditing by Alison Williams)
