* Shares fall as much as 3.4 pct, close down 0.5 pct
* Pirelli prices IPO at 6.5 euros per share
* Valuation too low for managers to get special award (Updates with closing price)
MILAN, Oct 4 (Reuters) - Shares in Italy's Pirelli fell on Wednesday on the tyremaker's return to the Milan stock exchange two years after it was taken over by China National Chemical Corp (ChemChina).
The stock fell as much as 3.4 percent during the day, with a trader saying that while the IPO price had been cut it was still considered to be overvaluing the company.
However, the stock pared some losses during the afternoon to close at 6.47 euros, down 0.5 percent, compared with a 1.44 percent loss for the blue-chip FTSE MIB index.
The maker of tyres for Formula One racing teams and premium automakers such as BMW and Mercedes sold shares in the offer at 6.5 euros apiece, valuing the company at 6.5 billion euros ($7.65 billion). That was well below the 8.3 euros per share that marked the top of the original offer price range.
Despite being one of Italy's best-known corporate names, prospective investors had raised concerns over Pirelli's debt pile, complex governance structure and the risk that one of the existing minority shareholders could sell once a lock-up expires.
The relisting will test demand for a streamlined firm that focuses on high-end consumer tyres after its less profitable truck and industrial tyre business was folded into part of ChemChina. The shares will join Milan's blue-chip FTSE MIB index from December, the head of the bourse said.
Chief Executive Marco Tronchetti Provera sought to play down any disappointment over the share price performance on Wednesday.
"Let's see in a few months. We know the company is solid and will bring results ... there's always volatility during the first days," he said after ringing the opening bell.
The owners of the world's fifth-largest tyremaker have sold up to 40 percent of their shares in the IPO, raising up to 2.6 billion euros, depending on whether the investment banks underwriting the share offer exercise a greenshoe option to sell more shares.
Pirelli had traded on the Milan stock exchange since 1922 but was de-listed in 2015 after ChemChina took a 65 percent stake in the holding company controlling the tyremaker.
With the IPO sale, the Chinese have reduced their stake to 45 percent plus 1 share.
Tronchetti Provera and banks UniCredit and Intesa Sanpaolo retain around 10 percent of Pirelli after the sale, while investment fund LTI, linked to Russia's Rosneft , keeps 5 percent.
Those shareholdings could still change slightly depending on whether the banks exercise the greenshoe option.
Pirelli is more profitable than France's Michelin and Germany's Continental, but its core profit margin of around 20 percent lags that of high-end Finnish rival Nokian , which stands at nearly 30 percent.
Some analysts have raised concern about the management succession, with Tronchetti Provera set to retire after 2020.
A question mark also remains over the role the Chinese will play in running the company following the share sale, although Pirelli has repeatedly said ChemChina has taken a passive approach to its management.
"Pirelli is a historic brand ... and with today's share drop it's more aligned with the rest of the market," said Lorenzo Batacchi, portfolio manager at BPER Banca, adding the stock was interesting at 6.3 euros per share. (Additional reporting by Giancarlo Navach; Editing by Keith Weir, Greg Mahlich and Mark Potter)