* Pan-European STOXX 600 index down 0.8 pct
* But Ingenico rises on good updates (Recasts, adds detail and updates prices at close)
By Kit Rees and Danilo Masoni
LONDON, Feb 24 (Reuters) - European shares dropped on Friday with banks and miners falling as a raft of disappointing earnings updates and political worries dented sentiment.
The STOXX 600 was down 0.8 percent at its close, erasing gains made earlier in the week and snapping a two-week winning streak. This was the index's lowest closing level in three weeks.
Basic resources (Frankfurt: W8Z.F - news) stocks were the biggest sectoral fallers, down 2.1 percent after metals prices dropped, while banks were also under pressure, with the sectoral index falling 1.4 percent and touching its lowest level since early December.
Standard Chartered fell 2.7 percent after it said it would not pay a dividend for 2016 due to restructuring costs, while RBS fell 4.5 percent as it reported a 2016 loss of 7 billion pounds due to higher misconduct charges and restructuring costs, scoring its ninth straight annual loss.
The Italian banking index also fell 2.4 percent. 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 ended 2.3 percent lower.
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 around 1.5 percent.
"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.
German stocks were also hit by political worries, with the blue chip DAX dropping 1.2 percent as bond market jitters hit equities.
Overall, Saipem (LSE: 0NWY.L - news) was the biggest faller, down almost 7 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 7.2 percent, after a well-received earnings update. (Reporting by Kit Rees and Danilo Masoni; Editing by Robin Pomeroy)