European shares stall after four-day rally; Swiss stocks fall again

* FTSEurofirst 300 flat, halts sharp 4-day rally

* Italian 'popolari' banks up after govt approves reform

* Poll shows ECB to unveil 600 bln eur QE programme

By Blaise Robinson

PARIS, Jan 21 (Reuters) - European shares paused on Wednesday after a four-day rally driven by expectations the European Central Bank is about to launch quantitative easing had taken them to seven-year highs.

ASML NV outperformed, however, rising 4.6 percent after the world's second-largest maker of semiconductor production equipment posted better-than-expected fourth-quarter results.

Shares (Frankfurt: DI6.F - news) in Italy's popolari or cooperative banks also gained, with Banco Popolare, Popolare Milano (Milan: PMI.MI - news) and Popolare Emilia up 2.1-4.8 percent after the government approved an emergency decree that will force the largest 'popolari' to change their governance rules and become joint stock companies within the next 18 months.

The decree aims to consolidate the banking sector and will overhaul a system that currently gives all shareholders in the banks one vote regardless of the size of their stake.

At 0911 GMT, the FTSEurofirst 300 index of top European shares was flat at 1,422.76 points. The benchmark index, which hit a seven-year high on Tuesday, has surged 5 percent in the past four sessions.

"It's 'risk-on' in Europe ahead of the ECB's expected announcement on QE. Despite the high volatility, you can tell the market wants to believe that it will work," Saxo Bank trader Pierre Martin said.

"Investors are finally starting to price in the dramatic drop in the euro. We're seeing rising appetite for European equities across the board, and European stocks are outperforming Wall Street since the start of the year."

Money market traders polled by Reuters say the European Central Bank is expected to announce on Thursday a 600 billion euro sovereign bond-buying programme.

Around Europe, Britain's FTSE 100 index was up 0.6 percent, while Germany's DAX index was down 0.2 percent, retreating from a record high hit earlier this week, and France's CAC 40 was down 0.1 percent.

Shares in Swiss blue chips dropped. The SMI index was down 1.3 percent, resuming a sell-off sparked last week when the Swiss National Bank unexpectedly removed a ceiling on the Swiss franc, sending the currency soaring.

Shares in Switzerland's SGS dropped 3.7 percent after the world's largest testing and inspection company cut its outlook. (Editing by Susan Fenton)