German utilities outperform sluggish European stock markets

* German utilities boosted as coal levy plan scrapped

* Electrolux (Stockholm: ELUX-A.ST - news) slumps after deal challenged in U.S.

* Europe bourses in 2015: http://link.reuters.com/pap87v

* Asset performance in 2015: http://link.reuters.com/gap87v

By Lionel Laurent

LONDON, July 2 (Reuters) - German utility stocks rose sharply on Thursday after plans for a coal levy were scrapped, outperforming a flat showing on other benchmark European equity indexes that remained dogged by concerns over Greece.

German utility RWE (Xetra: 703712 - news) rose 6 percent, while rival E.ON advanced 3.3 percent after the plans for a levy on coal-fired power plants were dropped.

Any decision to go ahead with the plans would have threatened the survival of 17 out of 20 of RWE's brown coal-fired power stations & two out of three brown coal mines, RWE had said during months of wrangling.

The STOXX Europe 600 Utility Index rose 1.6 percent, outstripping the broader, pan-European STOXX 600 index, which was flat.

The pan-European FTSEurofirst 300 index was also flat while the euro zone's blue-chip Euro STOXX 50 index slipped 0.1 percent.

Traders said uncertainty over Greece, which faces a referendum on Sunday that may decide its future in the euro zone, meant many investors were unwilling to buy up new European equity positions at present.

Some, however, said the longer-term outlook for European equities was positive, with the European market supported by a backdrop of economic stimulus measures from the European Central Bank (ECB).

"Ongoing Greece uncertainty is creating shorter-term headwind but when we focus on the fundamentals we believe they are still supportive for European equities," said HSBC strategist Robert Parkes.

ELECTROLUX SLUMPS

Sweden's Electrolux slumped after a U.S. legal challenge to a deal.

Electrolux, which owns the Frigidaire, Kenmore and Tappan brands, fell around 10 percent after the United States filed a lawsuit to prevent it from buying General Electric's appliance business.

The twists and turns of Athens' stand-off with international creditors have pushed European market volatility to levels not seen since the end of 2014, while June was the worst month for euro-zone equities since 2013.

Defiant Greek Prime Minister Alexis Tsipras urged his country to reject an international bailout deal on Sunday. Earlier in the week, Greece defaulted on debt owed to the International Monetary Fund (IMF).

JPMorgan (LSE: JPIU.L - news) analysts also warned that a Greek exit from the euro zone might have spillover effects on the region's banks via losses on their bond portfolios.

Today's European research round-up (Additional reporting by Liisa Tuhkanen; Editing by Mark Heinrich)