* ECB launches 60 billion euro a month QE programme
* Euro zone borrowing costs fall to new record lows
* Euro pummelled, European shares rise to new highs (Updates with new prices, adds new comments)
By Marius Zaharia
LONDON, Jan 22 (Reuters) - European government borrowing rates plummeted to record lows, the euro weakened and stock markets rallied on Thursday after the European Central Bank launched a landmark bond buying programme.
The stubbornly stagnant euro zone economy and falling consumer prices in the currency bloc prompted the ECB to unveil a 60 billion euro a month asset-purchase programme to run from March 2015 until the end of September next year.
"In a nutshell, the ECB seems to have taken the bull by the horn," said Benoit Anne, head of global EM strategy at Societe Generale.
In response, euro - seen as the main channel through which the programme will help lift prices - fell more than 1 percent against the dollar, the yen and the Swiss franc .
It traded near an 11-year low against the dollar as ECB President Mario Draghi spoke in a post-meeting news conference.
"He took out the bazooka ... It is a big and credible programme," said David Keeble, global head of interest rates at Credit Agricole in New York.
Yields on bonds which will be bought under the programme fell. Spanish and Italian 10-year bond yields fell by more than 10 basis points to new record lows of 1.446 percent and 1.611 percent, respectively.
German 10-year Bund yields, which set the standard for euro zone borrowing costs, hit a new low of 0.377 percent, down from 0.53 percent before Draghi spoke.
"Investors are going to be forced to higher-yielding assets," said Wilmer Stith, fixed income portfolio manager at Wilmington Trust in Baltimore, Maryland. "That's what the ECB wants to happen. They want to enlist more risk-taking in the economy."
The FTSEurofirst 300 index of top European shares hit a seven-year high, while Germany's DAX hit a record high, before paring gains. Italy's MIB index and Spain's IBEX were up 1.5-1.7 percent.
Draghi said the quantitative easing programme would include purchases of bonds with maturities of up to 30 years. Italian 30-year yields fell below 3 percent for the first time, while France's dropped below 1.5 percent.
The ECB will mainly buy investment-grade debt, but junk-rated bonds issued by countries that are in an international assistance scheme will also be included.
This increases the pressure on Greece to stick to its European Union/International Monetary Fund bailout deal after this weekend's snap elections. The vote looks likely to be won by the far-left Syriza party, which promises an end to austerity and a renegotiation of Athens's debt to official lenders.
Greek 10-year yields were down 13 basis points at 9.38 percent.
Market-implied inflation expectations ticked higher, although they still suggested price growth will remain well below the ECB's target in the coming decade.
Hours after the ECB decision, Denmark, whose crown currency is pegged to the euro, cut interest rates for the second time in a week, taking the deposit rate to -0.35 percent from -0.2 percent.
The crown weakened to 7.4457 crowns per euro from 7.4429 before rate cut, having fallen to 7.4540 crowns per euro earlier in the day because of intervention by the Danish central bank.
Reporting by the London markets team and Richard Leong in New York, writing by Marius Zaharia, editing by Nigel Stephenson/Jeremy Gaunt