European shares ease ahead of Trump inauguration

(Corrects Yu's title in paragraph 4)

* STOXX posts 0.9 pct weekly loss

* AstraZeneca (NYSE: AZN - news) weighs on pharma

* Amec Foster gains after upgrade

* TDC (LSE: 0MOP.L - news) rises after report of possible Telia bid

By Kit Rees and Danilo Masoni

MILAN, Jan 20 (Reuters) - European shares fell, posting their biggest weekly loss since before Donald Trump won the U.S presidential election in November, as investors grew cautious before his inauguration.

The STOXX 600 closed 0.1 percent lower, marking a five-day loss of almost 1 percent. Britain's FTSE slipped 0.1 percent and posted a weekly decline of 1.9 percent. European markets closed before Trump's inauguration speech.

The pan-European index has gained around 7 percent over the last two months, but it has slipped from its early January peak amid concerns Trump may struggle to deliver on his stimulus promises.

"I think markets now are attuned to expecting the unexpected, but by definition it means that there can be surprises along the way," Geoffrey Yu, Head of UK Chief Investment Office at UBS Wealth Management, said.

"This is a very unorthodox presidency, so we just won't know and markets didn't pre-position themselves for tweets, either."

The broader market was weakened by some disappointing earnings updates, although merger and acquisition talk helped support the telecoms sector.

British pharma stock AstraZeneca was 3.4 percent weaker, the biggest faller on the FTSE 100 index after rival Bristol-Myers Squibb Co decided not to seek accelerated U.S. approval for a combination of two immunotherapy drugs as an initial treatment for lung cancer.

The fall weighed on Europe's health care index, down 0.8 percent.

Danish insurer Tryg (LSE: 0OHN.L - news) was also among the biggest STOXX losers, down 2.9 percent after its fourth-quarter profit missed expectations.

Britain's AA (Frankfurt: A116XA - news) also dropped, falling 6.2 percent on worries about costs.

Energy stocks were among the biggest gainers, however, with shares in Subsea 7 (LSE: 0OGK.L - news) , Amec Foster Wheeler (Other OTC: AMCBF - news) and SBM Offshore (Swiss: SBM.SW - news) all rising between 4.7 percent to 5.4 percent.

Amec Foster Wheeler benefited from a SocGen (Paris: FR0000130809 - news) upgrade to "buy", citing the potential for the oil company's shares to re-rate.

TDC also rose, up 3.9 percent after a report in Dagens Industri said telecom operator Telia was considering a bid for the Danish company, which is itself exploring a takeover of Swedish cable TV company Com Hem (LSE: 0QV0.L - news) .

Telia and TDC both declined to comment on the report.

Gains in TDC drove Europe's STOXX telco index up 0.6 percent.

Banks were also firmer, with Commerzbank (LSE: 21170377.L - news) rising 2.8 percent after a price target upgrade from analysts at Deutsche Bank (IOB: 0H7D.IL - news) .

Shares (Berlin: DI6.BE - news) in Italy's UBI Banca (Amsterdam: UF8.AS - news) were the biggest fallers among the banking stocks, ending 2.2 percent lower after DBRS cut the trend on UBI Banca's debt ratings to negative following its acquisition of three banks.

(Reporting by Kit Rees and Danilo Masoni; Editing by Alison Williams)