* Euro STOXX up 0.7 pct as ECB unveils stimulus measure
* Index cools off after setting 6-yr high
* Banks, southern bourses lead gainers
By Francesco Canepa
LONDON, June 5 (Reuters) - Euro zone shares rose on Thursday, led by banks and periphery indexes, as the European Central Bank unveiled a string of measures to fight low inflation and boost the currency bloc's economy.
The ECB cut rates, effectively charging banks to deposit cash at the central bank, and outlined a four-year 400 billion euro ($544.86 billion) scheme aimed at stimulating credit at a time when banks face tough scrutiny of their asset quality.
Euro zone banks, which depend on the health of the domestic economy for their earnings and are facing stress tests by the ECB, surged 1.3 percent.
The central bank stopped short of large-scale asset buying known as quantitative easing, but chief Mario Draghi said it is preparing for possible purchases of asset-backed securities to support small business and would take more action if necessary.
"This is very positive for equities because implicit in the announcement is that rates are going to be low for a very long time," said Manish Singh, director and head of investment services at Crossbridge Capital.
"One also has to feel positive because Draghi will likely follow this up with more announcements at the next meeting."
The Euro STOXX index was up 0.7 percent at 331.36 points after setting a six-year high at 333.80. The blue-chip Euro STOXX 50 was up 0.8 percent at 3,262.72 points.
The announcement lifted the German blue-chip DAX index to an all-time high of 10,013.69 before it ticked back down to 9,930.00, flat on the day.
The index surged in high volume as Draghi spoke, before trimming its gains in lower trading activity into the close. Traders attributed the move to profit-taking on announcements that had largely been expected.
"There wasn't anything there that surprised me," said Marc Ostwald, a strategist at Monument Securities. "It's a big bazooka but on the other hand a lot of it looks like a Chekhov's gun: there is a lot which will happen in the future."
Italian, Portuguese and Spanish indexes, up between 1 percent and 1.4 percent, led risers as investors expected the ECB's measures to bring relief to economies struggling with low inflation and lending growth. Greek shares were up 2.8 percent.
Italian bank Mediobanca and Spanish lender Banco de Sabadell rose around 3.5 percent to feature among top risers on the euro zone Euro STOXX index.
The ECB measures are also expected to benefit companies struggling with high debt piles and meagre profits, such as French car maker Peugeot, up 2.5 percent.
The price of insuring against future swings in the euro zone blue chips, as measured by the Euro STOXX volatility index , fell 7.8 percent and briefly hit a six-month low.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Editing by Catherine Evans)