European stocks fall after ECB keeps rates unchanged

(ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report for more details) Adds details, updates prices)

* FTSEurofirst 300 down 1 percent after ECB decision

* Ericsson, Pernod top FTSEurofirst losers after results

* VW surges on signs of deal with U.S (Other OTC: UBGXF - news) . authorities

* Banks continue to outperform

By Danilo Masoni and Sudip Kar-Gupta

MILAN/LONDON, April 21 (Reuters) - European shares fell on Thursday after the European Central Bank (ECB) kept rates unchanged, with Swedish telecom equipment maker Ericsson and French drinks firm Pernod leading the fall after disappointing updates.

ECB President Mario Draghi kept borrowing costs at rock bottom levels, sticking to his course of ultra-loose monetary policy, and said the bank would start its corporate bond purchases and a new round of cheap bank refinancing in June.

Anthilia Capital Partners fund manager Giuseppe Sersale said while it was too early to assess the impact of Draghi's speech, details on credit measures were positive and there was some disappointment he did not mention the strength of the euro.

The pan-European FTSEurofirst 300 index was down 1 percent at 1315 GMT, extending losses after Draghi started to speak and after hitting three-month highs earlier in the week.

Shares (Berlin: DI6.BE - news) in Ericsson slumped 12 percent after it posted first-quarter sales and operating profit lower than markets expected.

Pernod Ricard (Paris: FR0000120693 - news) fell 7.4 percent after third-quarter sales came in below expectations as whisky sales in China continued to suffer.

Shares in Volkswagen (LSE: 0P6N.L - news) rose 5.4 percent after sources told Reuters that VW and U.S. officials had reached a framework deal for the automaker to buy back almost 500,000 diesel cars containing software that enabled them to evade U.S. emission rules.

Europe's bank sector index continued to outperform and was last up 1.3 percent.

Today's European research round-up

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Mike Dolan, Markets Editor EMEA. (Editing by Larry King)