Slide in Greek shares weighs on European stock markets

* Greek banking stocks drop on ECB move

* FTSEurofirst 300 index down 0.3 pct

* Swiss market falls as government warns of franc impact

* But Greek worries offset by ECB's new QE programme

By Blaise Robinson and Sudip Kar-Gupta

PARIS/LONDON, Feb 5 (Reuters) - Greek shares dropped on Thursday, pegging back European stock markets, after the European Central Bank abruptly cancelled its acceptance of Greek bonds in return for funding.

Greek banking stocks sank, with the Athens Stock Exchange FTSE Banks Index dropping 10.1 percent, driving Greece's broader ATG equity index down by 3.7 percent.

Shares (Berlin: DI6.BE - news) in National Bank (NYSE: NBHC - news) of Greece fell 13.9 percent, while Bank of Piraeus declined 13.1 percent.

Those two stocks were the worst performers, in percentage terms, on the broader, pan-European FTSEurofirst 300 index , which fell 0.3 percent to 1,482.22 points.

The ECB's move, which means the Greek central bank will have to provide its banks with tens of billions of euros of additional emergency liquidity in the coming weeks, was a response to what many in Frankfurt see as the new Greek government's abandonment of its aid-for-reform programme.

"Despite all the wishful thinking in Athens, the ECB has decided to use its veto. It's up to the Greek government now, and solutions have be found very quickly," said Mirabaud Securities senior equity sales trader John Plassard.

Jean Maigrot, portfolio manager at NewSmith Asset Management, said he was using the market volatility to buy stocks which he considered as oversold, such as French bank BNP (Paris: FR0000131104 - news) Paribas, while selling stocks such as luxury goods group LVMH which he thought were overbought.

BNP Paribas (Xetra: 887771 - news) shares were down 4.5 percent on Thursday after it warned that rising taxes and new regulations would hurt its 2016 earnings.

QE SAFETY NET?

Switzerland's main SMI equity index also weakened by 0.8 percent, after the Swiss government warned that the franc's surge in value would hurt the economy.

However, some traders said European equities were not being too badly hurt by Greece due to the ECB's decision to start buying government bonds to pump money into the struggling euro zone economy.

The ECB's quantitative easing plan has weighed on the euro currency, helping European exporters sell their goods overseas and making European shares cheaper for U.S investors.

"In the short term, Greece is a worry. But longer term, people are looking towards QE, and the fact of the matter is that with this weaker euro, American buyers are coming in to buy up European shares," said Terry Torrison, managing director at Monaco-based McLaren Securities.

Today's European research round-up (Additional reporting by George Georgiopoulos in Athens; Editing by Toby Chopra/Ruth Pitchford)