* FTSEurofirst 300 down 0.5 pct
* Novartis and BASF fall after weak earnings updates
* ARM down as Apple forecasts lower revenue
* RBS falls after warns of hit to profits (Adds detail)
By Sudip Kar-Gupta and Alistair Smout
LONDON, Jan 27 (Reuters) - European shares fell on Wednesday, hit by a drop in Swiss drugmaker Novartis and German chemicals company BASF after their weak earnings updates.
Royal Bank of Scotland also dropped after the bank warned its profits would be hit by a pension charge and U.S. litigation provisions.
A forecast of lower revenues from iPhone maker Apple also hit European technology and chipmaker stocks such as ARM and Dialog.
The pan-European FTSEurofirst 300 index was down by 0.5 percent to 1,329.53 points, while the euro zone’s blue-chip Euro STOXX 50 index fell 0.5 percent.
Novartis fell 4.1 percent after its fourth-quarter core net income missed expectations, while BASF declined by 3.3 percent after issuing a profit warning.
“We’re only just getting under way on the European earnings front, but it’s been a pretty mixed bag so far with weak updates from Novartis and BASF,” said Clairinvest fund manager Ion-Marc Valahu.
Sweden’s Ericsson dropped 6 percent, even after operating profit beat consensus. Analysts said that underlying negative growth was a concern, while the gross margin was narrower than expected.
“Underlying looks slightly weaker than expected... we believe consensus sales and GP estimates for 2016/2017 are likely to see downward revision of 2- 3 percent,” analysts at Credit Suisse said in a note.
Elsewhere in Scandinavia, TDC dropped 9.8 percent, the biggest decline on the STOXX Europe 600, after the Danish telecom operator scrapped its dividend following a deterioration in its financial results.
Italy’s FTSE MIB equity index also fell 1.3 percent, even though Italy reached a deal with the European Commission to help Italian banks sell some of their 200 billion euros of bad loans.
Traders said that while the deal on the Italian banks’ bad debts was a step in the right direction, the mechanics on how it would work were unclear and could be costly for the banks.
The pan-European FTSEurofirst 300 index had risen 0.9 percent on Tuesday, helped by a rebound in oil prices.
The index rose from lows on Wednesday after Brent crude turned positive following a weak start, cutting losses in the oil sector.
Concerns about a slowdown in China, the world’s second-biggest economy and a major consumer of oil and metals, have hit world stock markets this year, while worries about oversupply have pushed oil prices to their lowest level in more than 10 years.
Germany’s DAX, which was down 0.3 percent, remains some 20 percent below a record high reached in April 2015. Both the DAX and FTSEurofirst are down nearly 10 percent since the start of 2016.
“I’d be looking to sell into rallies on the stock markets until this oil price stabilises,” said Hantec Markets’ analyst Richard Perry.
Today’s European research round-up
Additional reporting by Danilo Masoni in Milan; Editing by Katharine Houreld