UPDATE 2-Euro zone stocks hit by firm euro as Draghi shoos away hopeful doves

* STOXX 600 flat; Euro zone stocks down 0.2% as strong euro
weighs
* Banks slide as ECB loan program not as generous as hoped
for
* Renault drops after Fiat Chrysler ditches deal talks
* Danish stocks rise, country to see new government

(Recasts, updates to close, adds graphic, quotes)
By Aaron Saldanha
June 6 (Reuters) - Euro zone shares underperformed their
broader European peers on Thursday, hit by a stronger euro after
the European Central Bank matched investors' expectations in
keeping rates untouched but refrained from providing as dovish
an outlook as hoped.
Euro zone equities .STOXXE fell 0.2%, while the
pan-European STOXX 600 .STOXX marked time. A firmer euro trims
the value of euro zone companies' overseas earnings when
converted back to the common currency, hitting their overall
profitability. FRX/
Germany's DAX .GDAXI shed 0.2%, while French stocks
.FCHI fell 0.3%. London-traded equities .FTSE eked out a
gain. .L
Thursday's performance trims the degree to which euro zone
stocks have relatively outperformed the European benchmark in
the quarter to date.
"It would have been very, very difficult for the ECB to
out-dove the market and push yields even lower," said Andrea
Iannelli, investment director at Fidelity.
"More importantly he did say rates are not going anywhere
until 2020, potentially even longer… that doesn't really help
banks.
European lenders .SX7P had a torrid day, flipping into
negative territory and ending 1% lower, as the ECB did not
detail as generous a cheap loan lending programme for banks as
investors had expected. Elwin de Groot, Rabobank's head of macro strategy for the
euro zone and ECB, told the Reuters Global Markets Forum the 10
basis point premium on the programme compared to the previous
series was a signal the ECB is keen on making the banks view it
more for liquidity than as a funding tool.
Milan-traded equities .FTMIB edged up, although Italian
lenders .FTIT8300 reversed early gains to slide 1.2% with
UniCredit falling 1.1%, while Banco BPM dropped 2%.
Auto-makers and their suppliers .SXAP declined 0.9%, as
Renault SA RENA.PA dived 6.4% after Fiat Chrysler Automobiles
FCHA.MI walked away from an over $35 billion merger with the
French carmaker. Real estate stocks .SX86P fell 2.2% as reports Berlin
authorities were planning to impose a cap on rents hit German
property firms Vonovia VNAn.DE and Deutsche Wohnen DWNG.DE
to the tune of 4.7% and 7.7%, respectively. Utilities stocks .SX6P , considered a defensive sector,
clocked the biggest gains in Europe as they rose 1.3%.
Stocks in Copenhagen .OMXC20 rose 1.6%. Mette Frederiksen,
leader of the Social Democrats, said she would launch talks to
form a government after a centre-left election victory put her
on course to become the country's youngest ever prime minister.
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Eurozone stocks outperform broader European peers QTD https://tmsnrt.rs/2QPWecJ
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