MILAN/LONDON (Reuters) - Catwalk favorite Prada's hopes of being the first European fashion house to strut its stuff on the Hong Kong stock market could be delayed by pressure to split the listing with hometown Milan.

The Italian maker of cutting-edge bags with a triangle logo has shelved a flotation three times over the last decade. But expectations for an initial public offering have mounted after Prada said in October it may list next year, possibly in Hong Kong, if markets recover.

Analysts estimate Prada could aim to raise 1.2 billion euros ($1.58 billion) from the sale of a third of its shares in Hong Kong, the first ever Italian listing on the Asian bourse, at a multiple of 10 times its projected 2010 core earnings.

"The issue is what the primary market would be," said Simone Ragazzi, an analyst at Italy's Centrobanca.

"Milan could be a necessary condition because of Prada's debt exposure with local banks," Ragazzi said.

Prada's indebtedness to top domestic lenders including UniCredit (CRDI.MI) and Intesa Sanpaolo (ISP.MI) has fueled expectations it could opt for a dual listing with Milan, a strategy that investment bankers say risks splitting the liquidity too much.

"A dual listing would not suit Prada. Investors would trade down shares," a banker said, asking not to be named.

The owner of Miu Miu, Church's and Car Shoe brands needs to raise cash to pay down debts of around 1 billion euros ($1.3 billion) and fund growth in Asia, where it expects sales to exceed those of Europe over the next three years.

Italian creditor banks Intesa Sanpaolo, which bought a 5.11 percent stake in Prada Spa four years ago, and UniCredit sit on the company's board.

Media reports have said Italian banks would prefer Milan to Hong Kong, where no Italian company is traded.

Prada says it has not yet hired advisers for an IPO, but media have said the two Italian lenders would be among the possible bookrunners.

Prada, 95 percent owned by the families of Chief Executive Patrizio Bertelli and his fashion designer wife Miuccia Prada, has more recently played down chances of an imminent listing.