* Greek banking stocks drop on ECB move
* FTSEurofirst 300 index closes flat at 1,487.81 points
* Swiss market falls as government warns of franc impact
* But Greek worries are offset by ECB's new QE programme
* Dassault Systemes rises on bullish outlook
By Sudip Kar-Gupta and Blaise Robinson
LONDON/PARIS, Feb 5 (Reuters) - Greek shares dropped on Thursday, holding 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 percent, driving Greece's broader ATG equity index down by 3.4 percent.
Shares in National Bank of Greece fell 12.3 percent and Bank of Piraeus declined 15 percent. Greek shares regained some ground after the ECB let the Greek central bank offer lenders emergency funding of up to 60 billion euros ($68.6 billion).
"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 to be found very quickly," said Mirabaud Securities senior equity sales trader John Plassard.
Bank of Piraeus and National Bank of Greece were the worst performers on the broader, pan-European FTSEurofirst 300 index , which closed flat at 1,487.81 points. The euro zone's blue-chip Euro STOXX 50 index fell 0.2 percent.
Software developer Dassault Systemes rose 8 percent to finish as the FTSEurofirst's best performer after the company forecast further growth this year.
Jean Maigrot, portfolio manager at NewSmith Asset Management, said he was using the market volatility to buy stocks which he considered oversold, such as French bank BNP Paribas, and sell stocks such as luxury goods group LVMH, which he thought were overbought.
BNP Paribas fell 3.7 percent on Thursday after it warned that rising taxes and new regulations would hurt its 2016 earnings.
Switzerland's main SMI equity index also weakened by 0.7 percent, after the Swiss government warned that the franc's surge in value would hurt the economy.
Some traders said any damage to European shares was offset by 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 weakened the euro , making euro zone exports cheaper and competing imports more expensive. It also makes euro zone 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.
($1 = 0.8744 euros)
Today's European research round-up (Additional reporting by George Georgiopoulos in Athens; Editing by Larry King)