NEW YORK (Reuters) - A New Jersey state judge on Friday rejected Citigroup Inc's (C.N: Quote, Profile, Research, Stock Buzz) bid to dismiss Parmalat SpA's (PLT.MI: Quote, Profile, Research, Stock Buzz) $2.2 billion lawsuit over the bank's alleged role in the Italian food company's 2003 collapse.

Judge Jonathan Harris of Bergen County Superior Court turned aside Citigroup's motion for a directed verdict at the trial, which began May 15. Citigroup will have an opportunity to present evidence before the case heads to a jury.

"I believe, with no lack of confidence, that it would be an abuse of my discretion to grant the motion to dismiss the case at this time," Harris said, according to a hearing transcript.

He said a "rational juror" could conclude, based on the evidence presented, that "misappropriation or looting" took place, warranting damages, the transcript shows.

A directed verdict for a defendant means a plaintiff didn't present enough evidence to justify continuing a trial. Defendants often seek directed verdicts after plaintiffs finish presenting evidence, but such requests often fail.

Citigroup spokeswoman Andrea Hurst said: "Citi is a victim of Parmalat's fraud, and we are confident the merits of our position will be demonstrated at trial." The bank has said it lost almost $700 million related to Parmalat.

New York-based Citigroup is the first defendant to go to trial in the United States over accusations of helping conceal corrupt activity by former Parmalat insiders.

Parmalat accused Citigroup of aiding and abetting a breach of fiduciary duties by those insiders.

The Italian company originally sought $10 billion, but Harris in April threw out several of its claims.

Known for its long-life milk, Parmalat collapsed in December 2003 under 14 billion euros ($22 billion) of debt, after uncovering a 4 billion euro ($6.3 billion) hole in its accounts. Some people called the collapse "Europe's Enron."

Parmalat emerged from bankruptcy in 2005. Chief Executive Enrico Bondi has filed dozens of lawsuits against former Parmalat bankers and auditors and recovered several hundred million dollars.

The company also has sued Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) and auditor Grant Thornton International in Manhattan federal court. Those cases have been expected to go to trial in 2009.

Another former auditor, Deloitte Touche Tohmatsu, agreed to pay $149 million in a January 2007 settlement.

Citigroup shares were off 1.8 percent on the New York Stock Exchange in afternoon trading and Bank of America shares were off 3.4 percent, while Parmalat shares dipped 0.4 percent in Milan.

(Additional reporting by Martha Graybow, editing by Gerald E. McCormick)