* Moody's cuts ING, ABN, Rabobank, LeasePlan by 2 notches

* SNS Bank downgraded one notch

* ING still on negative outlook, others now stable

* ING, SNS Reaal shares rise on euro zone news (Adds share reaction, detail)

June 15 (Reuters) - Moody's has cut the ratings of 11 European banks and said it would cut again if Greece ditched the euro, kicking off a long-awaited round of downgrades for major European institutions.

Moody's Investors Service said on Friday it had taken action against five Dutch banking groups, three French banks and one each from Belgium and Luxembourg.

Investors shrugged off the news after central banks from major economies had indicated they were prepared to take steps, including coordinated action, to stabilise markets in the wake of Greece's election on Sunday. The benchmark FTSEurofirst 300 index was up 0.7 percent at 0835 GMT.

Still, the downgrades will only add to pressure on European Union leaders to sort out the region's debt crisis.

Moody's was expected to downgrade some of the world's biggest banks by the end of June, which would widen the gulf in prospects between the strongest banks and weaker rivals. Bank of America Corp, Citigroup and Morgan Stanley are among those whose ratings could be affected.

On Friday, Moody's cut four Dutch banks by two notches with one moved a single step lower. It kept a negative outlook for Dutch bank and insurer ING Bank, one of those cut two notches, meaning the rating could be cut again.

ING shares were up 2.8 percent, while SNS Reaal, whose banking unit was also downgraded, rose 3.9 percent, buoyed by the better tone in the broader market.


DIFFICULT CONDITIONS

"Today's actions reflect Moody's view that Dutch banks will face difficult operating conditions throughout 2012 and possibly beyond," it said.

The agency said there were heightened risks for creditors amidst elevated uncertainty and downside risks to the economic outlook and fragile investor confidence in Europe.

Moody's agency said it had cut the ratings by two notches to Aa2 for Rabobank Nederland, to A2 for ING, to A2 for ABN AMRO Bank, and to Baa2 for LeasePlan Corporation .

The long-term debt and deposit ratings for SNS Bank, owned by SNS Reaal, were cut one notch to Baa2.

Short-term ratings for all the groups were unchanged.

Moody's said while it had factored in an increased risk of Greece leaving the euro area, this was not its central scenario. "If a Greek exit became Moody's central scenario, further rating actions on European banks could well be needed."

Moody's said the negative outlook for ING took into account the bank's funding structure, which relies substantially on wholesale funds and a significant amount of non-domestic deposits. ING received 10 billion euros in state aid during the 2008 financial crisis.

It was subsequently forced to separate its banking and insurance businesses and sell off various assets to meet European Commission requirements for state aid. The disposal could also help to raise money to repay state aid.

Moody's also cut ratings for French groups Banque Federative du Credit Mutuel, BPCE and CIC, and also KBC from Belgium, and Banque et Caisse d'Epargne de l'Etat from Luxembourg .

"To date, we have taken actions on banks in Germany, Austria, Spain, Italy, Portugal, Sweden, Norway, Denmark and Finland," it said. (Reporting by Wayne Cole; Additional reporting by Sara Webb; Editing by Paul Tait and Dan Lalor)