* FTSEurofirst 300 flat after Thursday's 3 pct rally
* Roche hit as two drugs fail tests
* Air France tumbles after third profit warning (Recasts, adds details, quote)
By Alistair Smout
LONDON, Dec 19 (Reuters) - European stocks held steady on Friday, pegged back by Swiss drugmaker Roche after it saw two major drugs fail tests and with Italian banks under pressure from a downgrade by S&P.
Healthcare stocks took the most points off the FTSEurofirst 300, with Roche leading the index lower, down 5.3 percent after tests of new Alzheimer's and breast cancer drugs both failed. Analysts said forecasts for 2015 would have to be revised downwards.
"The upcoming drug pipeline was priced into the stock, but it looks unlikely these revenues will materialise," Jasper Lawler, market analyst at CMC Markets, said.
The STOXX Europe 600 Health Care index fell 1.3 percent, the biggest sectoral faller.
The FTSEurofirst 300 index of top European shares was flat at 1,356.28 points at 1507 GMT, pausing after a 3 percent advance on Thursday.
The index was still set for a 2.7 percent rise this week, its biggest weekly gain in a month, as the U.S. Federal Reserve's commitment to be "patient" about raising interest rates bolstered stocks.
"The Fed's statement earlier in the week helped to squeeze us higher. But the market doesn't have a high degree of conviction at the moment," Jeremy Batstone-Carr, market analyst at Charles Stanley.
"The outlook remains one of sub-trend growth and low inflation. The downgrades in Italy illustrate that we're not out of the woods as far as growth is concerned."
Peripheral euro zone indexes were under pressure after Standards and Poor's cut Italian bank ratings, saying growth would be slower than expected.
Banks Monte Paschi, Intesa Sanpaolo and UniCredit were down 1.5 to 3.4 percent, although Italy's FTSE MIB recovered from early losses to trade flat.
Stocks were also under pressure after sources told Reuters that European Central Bank officials are considering ways to put conditions on any potential stimulus programme.
Air France-KLM tumbled 8.1 percent after the airline issued its third profit warning in six months. It cut a 2014 earnings goal by 200 million euros as higher-than-expected costs from a recent pilot strike added to weaker unit revenues.
Germany's BASF was down 2.4 percent, accounting for over half the fall on the DAX, after it abandoned an asset swap with Russia's Gazprom.
"(The) earnings impact from termination of asset swap is likely to be mild, but investors may be disappointed that BASF retains a low-growth business it wanted to exit," Paul Walsh, analyst at Morgan Stanley, said in a research note.
The DAX was down 0.4 percent.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Editing by Alison Williams)