European stocks slip as 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)

* FTSEurofirst 300 down 0.3 pct, off lows as euro falls back

* Disappointing results hit Ericsson, Pernod shares

* Volkswagen (LSE: 0P6N.L - news) surges on deal with U.S (Other OTC: UBGXF - news) . authorities

* Banks lead sectoral gainers led by Greek lenders

By Danilo Masoni and Sudip Kar-Gupta

MILAN/LONDON, April 21 (Reuters) - European shares fell slightly on Thursday after the European Central Bank 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 record lows, sticking to his course of ultra-loose monetary policy, and said the bank would start corporate bond purchases and a new round of cheap bank refinancing in June.

Although details about the corporate bond purchase programme were seen as a boost, the fact that Draghi did not mention the strength of the euro as a concern weighed on stocks, said Anthilia Capital Partners fund manager Giuseppe Sersale.

The euro initially rose after Draghi spoke but later was down against the dollar, as traders weighed the potential for a more hawkish Federal Reserve next week, helping the FTSEurofirst 300 index end off lows and down 0.3 percent.

Europe's bank sector index outperformed to rise 1.4 percent.

The new round of cheap ECB money is seen helping the region's lenders and the sector also saw a rally in Greek banking stocks on signs that Athens and its international creditors were making progress in talks on economic reforms.

The Italian banking index rose 1.6 percent after Draghi said Italy's new bank bailout fund, created this month to boost confidence in the country's banks, was a "small step" in the right direction.

However most sectors ended in the red with some investors blaming disappointing earnings updates and profit-taking following gains that brought the FTSEurofirst to touch a three-month high this week.

Shares (Berlin: DI6.BE - news) in Ericsson slumped 14.6 percent after it posted first-quarter sales and operating profit lower than markets expected.

Pernod Ricard (Paris: FR0000120693 - news) fell 4.9 percent after third-quarter sales came in below expectations as whisky sales in China continued to suffer.

In spite of Thursday's declines, Consultinvest fund manager Enrico Vaccari said he expected the recent positive trend to continue amid signs of an improving macro picture.

Shares in Volkswagen rose 5.1 percent after the carmaker and reached a deal with U.S. authorities to address excess diesel emissions in nearly 600,000 polluting vehicles that will include buyback offers and a possible fix. Expectations of a deal had already boosted VW shares in the previous session.

Today's European research round-up

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Mike Dolan, Markets Editor EMEA. (Editing by Robin Pomeroy)