Defensives in the driving seat as European shares shake off tech tremors

* STOXX 600 up 0.5 pct

* Drop in bond yields hits banks, helps defensives

* Utilities top gainers

* Healthcare (Shanghai: 603313.SS - news) stocks boosted by Shire (Hamburg: 3979575.HM - news)

* Chipmakers lead tech fallers

* Analysts worried over stretched tech valuations

(Updates prices, adds details)

By Danilo Masoni and Helen Reid

LONDON/MILAN, March 28 (Reuters) - Defensive stocks won the

day in European markets on Wednesday, driving regional

benchmarks higher despite heavy losses in the technology sector

amid concern over a regulatory crackdown.

The pan-regional STOXX 600 index ended the day up

0.5 percent, with consumer staples and healthcare stocks -

labeled "defensive" due to their large dividends - driving the

market.

Germany's DAX, which is heavier in industrials and

autos stocks, was a laggard, down 0.3 percent.

As tech stocks dropped, hit by concerns over a

regulatory crackdown after allegation against Facebook (NasdaqGS: FB - news) of

privacy breaches, investors reached for the defensive sectors

typically favoured in times of market stress.

A fall in bond yields also helped defensive sectors

outperform.

Europe's utilities index jumped 3.2 percent, its

best daily gain in 21 months.

Healthcare stocks gained 1.6 percent, led by Shire

, which soared 14 percent on news Japan's largest

drugmaker, Takeda Pharmaceutical, was considering a bid

for the UK company.

Consumer goods giants Nestle (Swiss: NESN.VX - news) , Unilever (NYSE: UL - news) and

British American Tobacco (Kuala Lumpur: 4162.KL - news) were among the strongest

single-stock boosts to the STOXX.

Tremors in tech stocks began in the U.S. and spread to

global markets. Europe's tech sector fell 1.8 percent,

hitting a near seven-week low, as the Nasdaq (Frankfurt: 813516 - news) dropped with Amazon

and Apple (NasdaqGS: AAPL - news) shares falling sharply.

Amazon fell 5 percent after reports President

Donald Trump was looking to target the company by changing its

tax treatment.

Tech has been a key driver behind a global equity rally, and

investors are concerned that an increase in regulation will

spark a further sell-off.

"A recent stream of negative news has acted as a trigger for

the sell-off in the U.S. tech sector. But the underlying cause

... is extremely stretched valuation metrics that have generated

a sizeable misalignment with fundamentals, mostly for the big

technology stocks," said UniCredit (EUREX: DE000A163206.EX - news) in a note.

On a price-to-earnings basis, European and U.S. technology

stocks are valued around their highest level in more than a

decade. European tech stocks have fallen 9.5 percent from their

peak a the end of 2017, but they remain among the best

performers over the past year, up 2.5 percent.

Top fallers among European tech stocks were chipmakers ams

, ASML (Milan: ASML.MI - news) , STMicro and Infineon

.

Ams (IOB: 0QWC.IL - news) fell 10.2 percent, STMicro tumbled 5.9 percent and

Infineon (Xetra: 623100 - news) dropped 4.8 percent.

"As concerns semiconductors, the fear comes from the

environment of bad news that is accumulating around the

functioning and testing of autonomous vehicles," IG (Frankfurt: A0EARV - news) analyst

Alexandre Baradez said.

Chipmaker Nvidia Corp suspended self-driving car

tests, a week after an Uber autonomous vehicle struck

and killed a woman in Arizona.

Miners also suffered heavy losses as metal prices

fell, weighed by a rising dollar.

(Reporting by Danilo Masoni

Editing by Larry King)