World champion Mark Cavendish of Britain won the stage in a sprint finish Sunday.
Phinney, who won Saturday's opening individual time trial, retained the pink jersey. He made up lost time after a chain broke with less than five miles to go. Phinney lost 30 seconds but pedaled frantically to catch up with the main pack less than two miles from the finish.
"I was in a full panic. I tried to remain as relaxed as much as I could, but it wasn't easy because I knew I could have lost the jersey," Phinney told VeloNews.com. "I do not know what happened. I was in good position, in the front 10 riders, then there was a heavy brake right in front of us. I lost my balance and fell. I got back up right away, but I lost the chain."
A BMC mechanic helped Phinney to replace the chain, but he then had to chase down the peloton, which he successfully did.
"That's cycling. Things can happen in an instant," he said. "That last effort was quite taxing. I was really happy to see that finish line."
Cavendish was led out by Welsh teammate Geraint Thomas in the 128-mile loop starting and ending in Herning. It was his eighth stage victory in the Giro.
The Team Sky cyclist edged Matt Goss of Australia and finished in 4 hours, 53 minutes, 12 seconds. Geoffrey Soupe of France was third.
Alfredo Balloni, Oliver Kaisen and Miguel Angel Rubiano made an early break, about 10 miles into the stage. The trio was caught with about 25 miles to go.
Today, the Giro resumes with another flat stage in Denmark before moving to Italy on Wednesday following Tuesday's rest day.
128-mile loop starting and ending in Herning, Denmark
1. Mark Cavendish, Britain, Sky Procycling, 4 hours, 53 minutes, 12 seconds; 2. Matt Goss, Australia, GreenEdge, same time; 3. Geoffrey Soupe, France, FDJ-Big Mat, same time; 4. Taylor Phinney, United States, BMC Racing, same time; 5. Roberto Ferrari, Italy, Androni Giocattoli, same time; 6. Mark Renshaw, Australia, Rabobank, same time; 7. Thor Hushovd, Norway, BMC Racing, same time; 8. Daniele Bennati, Italy, RadioShack-Nissan, same time; 9. William Bonnet, France, FDJ-Big Mat, same time; 10. Geraint Thomas, Britain, Sky Procycling, same time.
(After 2 of 21 stages)
1. Taylor Phinney, United States, BMC Racing, 5 hours, 3 minutes, 38 seconds; 2. Geraint Thomas, Britain, Sky Procycling, 9 seconds behind; 3. Alex Rasmussen, Denmark, Garmin-Barracuda, :13; 4. Manuele Boaro, Italy, Saxo-Bank, :15; 5. Gustav Erik Larsson, Sweden, Vacansoleil, :22; 6. Ramunas Navardauskas, Lithuania, Garmin-Barracuda, :22; 7. Brett Lancaster, Australia, GreenEdge, :23; 8. Marco Pinotti, Italy, BMC Racing, :24; 9. Jesse Sergent, New Zealand, RadioShack-Nissan, :26; 10. Nelson Oliveira, Portugal, RadioShack-Nissan, :27.