* Rise in euro weighs on European stocks
* Mining shares outperform post-Fed
* Vienna Insurance, Immofinanz fall sharply
By Atul Prakash
LONDON, March 17 (Reuters) - European equities fell on Thursday, dragged down by exporters as the euro strengthened against the dollar after the U.S. Federal Reserve flagged fewer rate rises this year than previously expected.
Mining companies, however, were among the beneficiaries as a weaker dollar made metals more affordable to consumers who buy them in non-dollar denominated currencies, boosting metals such as copper and aluminium.
The FTSEurofirst 300 index provisionally closed 0.3 percent lower, a day after the Fed held rates steady and indicated that while moderate U.S. economic growth and “strong job gains” would allow it to raise rates this year, policymakers now expect two quarter-point increases by the end of the year, half the number forecast in December.
The European automobile index slipped by 1.3 percent, pressured by falls of between 1.5 percent and 2.2 percent for BMW, Daimler, Renault and Peugeot, which feature among the big European exporters.
“Stocks are moving lower on the back of the euro’s advance. We’re just consolidating some of the gains made over the last month,” said Clairinvest fund manager Ion-Marc Valahu, pointing to the FTSEurofirst’s 10 percent gain over the past month.
Some analysts remained positive on the market’s outlook.
“European equities seem to be struggling at the moment because we have so many uncertainties. But investors are clearly searching for yield and still see opportunities in Europe, where equities are undervalued and the central bank’s policies are very supportive,” said Dennis Jose, head of European equity strategy at Barclays.
“On valuations grounds, Europe looks attractively priced.”
The European Banks index fell 1.4 percent, with KBC , Deutsche Bank, Unicredit and Commerzbank down by between 2.4 percent and 3.9 percent.
Bucking the trend, the STOXX Europe 600 Basic Resources index surged 6.1 percent on the dollar weakness. Shares in Glencore, Antofagasta, BHP Billiton and Rio Tinto jumped by between 5.4 percent and 8.9 percent.
Among other big movers, Banco Popolare slumped 14 percent, hit by speculation that merger talks with Banca Popolare di Milano to create Italy’s third-largest lender could break down.
The stock also came under pressure after Reuters reported that the European Central Bank has sent a letter to the two companies setting out conditions for approval of the merger. Banca Popolare di Milano was down 5.6 percent.
The dominance of big exporters in Germany’s DAX also weighed on the index, which fell 0.9 percent, underperforming the broader market.
Immofinanz shares fell 11.5 percent after reporting a loss, while Vienna Insurance slumped 17.9 percent after its results disappointed investors. (Additional reporting by Sudip Kar-Gupta; Editing by Ruth Pitchford and David Goodman)