Banks, BASF weigh on European shares at end of positive week

* Pan-European STOXX 600 index down 0.4 pct

* Chemical group BASF top drag after disappointing outlook

* Stanchart (HKSE: 2888-OL.HK - news) , RBS (LSE: RBS.L - news) fall after results in weak banking sector

* But Ingenico, Leonardo rise on good updates (Adds details, updates prices)

By Danilo Masoni

MILAN, Feb 24 (Reuters) - European shares slipped on Friday with banks falling and German chemical heavyweight BASF being hit by an underwhelming outlook.

The STOXX 600 was down 0.4 percent. The index did, however, remain near its 14-month high hit on Wednesday and was set for its third positive week in a row - a rally fuelled by solid company updates and upbeat economic data.

BASF fell 3.1 percent, the biggest drag on the STOXX. The world's largest chemicals group said it would return to earnings growth after higher petrochemical prices bolstered fourth-quarter profit. However, Baader Bank (Xetra: 508810 - news) said BASF delivered a low quality beat and its 2017 outlook disappointing.

"(A) BASF outlook significantly below expectations mirrors that the market was too bullish on BASF's earnings perspective and consequently too much hope is already in the share price," said Baader analyst Markus Mayer.

Banks were under pressure, with the sectoral index falling 0.7 percent to a two-week low following disappointing results from UK heavyweights Standard Chartered (BSE: 580001.BO - news) and Royal Bank of Scotland, and further weighed down by weakeness among Italian and French banks.

Standard Chartered fell 5 percent after it said it would not pay a dividend for 2016 due to restructuring costs, while RBS fell 2.9 percent as it reported a 2016 loss of 7 billion pounds due to higher misconduct charges and restructuring cost, scoring its ninth straight annual loss.

The Italian banking index fell 1.7 percent to its lowest level in more than 11 weeks. Traders said the sector was hit by a surge in Italian government bond yield spreads, which more than offset initial enthusiasm for the successful outcome of UniCredit (EUREX: DE000A163206.EX - news) 's 13 billion euro cash call.

After a higher open, UniCredit was last down 2 percent.

French banks BNP Paribas (LSE: 0HB5.L - news) , Societe Generale (Swiss: 519928.SW - news) and Credit Agricole (Swiss: ACA.SW - news) , whose stocks are seen as particularly sensitive to the outcome of the upcoming French presidential election, all fell more than 1 percent.

The latest opinion polls show far-right, eurosceptic candidate Marine Le Pen (Other OTC: PENC - news) remaining the favourite to win the first round in April, but still losing in the run-off.

"If the polls are wrong, a Le Pen victory would likely raise investor fears given her proposal to reintroduce a national currency and to hold a referendum on EU membership," analysts at UBS (LSE: 0QNR.L - news) said. Under such a scenario, they said investors should sell sectors such as financials that fall when spreads rise.

French media group Vivendi (LSE: 0IIF.L - news) fell 5 percent after its core operating profit fell by nearly one fifth last year, hit by a drop in the number of customers its French pay-TV arm.

Saipem (LSE: 0NWY.L - news) fell 5.5 percent after the Italian oil services company said it did not expect any recovery for the industry this year in spite of higher crude prices.

On the positive side, Ingenico (Paris: FR0000125346 - news) was the biggest gainer on the STOXX, up 4.5 percent, after a well-received earnings update. It was followed by Italian defence group Leonardo which rose 3.8 percent as investors cheered to its new targets and full-year results. (Editing by Jeremy Gaunt)