Health stocks help European equities cut losses

* STOXX 600 flat at close

* Novartis (IOB: 0QLR.IL - news) leads health stocks after study result

* UK's Imagination Tech puts itself up for sale, shares bounce

* Oil price weighs on energy stocks (Recasts, adds detail and updates prices at close)

By Kit Rees

LONDON, June 22 (Reuters) - A rise in European health stocks helped pull European shares out of negative territory on Thursday, pegged back by the slide in the energy sector on the back of weakened oil prices.

The pan-European STOXX 600 index ended the session flat following two days of straight losses, while the blue chips were also flat.

Health care was the top-gaining sector, up 2 percent and briefly touching its highest level since December 2015, with Switzerland's Novartis in the driving seat.

Novartis' shares marched 5 percent higher following a positive study result for its canakinumab medicine, which cuts risks for heart attack survivors.

"Expectations around this catalyst have been low and as a result we have previously highlighted success could drive 3% to 5% upside to mid-term EPS and valuations," analysts at Jefferies said in note.

Oil continued to dog European shares, however, as prices eased slightly off multi-month lows. Europe's energy sector was down 0.3 percent, touching near-7-month lows.

"What didn't help were those conflicting comments from OPEC ... and Iran. They need to be singing from the same hymn sheet if we are to believe that there's positivity to be taken from these cuts while the U.S. continues to produce more and the rig-count goes up," Mike van Dulken, head of research at Accendo Markets, said.

"As we saw yesterday, even a drawdown in stockpiles offered absolutely no help because it just added to the murky outlook."

Likewise pessimism on the oil sector and concerns around a 2018 supply glut from broker Morgan Stanley (Xetra: 885836 - news) put pressure on shares in Subsea 7 (LSE: 0OGK.L - news) , which they downgraded to "equal weight".

Subsea 7's shares dropped 4.4 percent to the bottom of the STOXX.

Elsewhere, Imagination Tech, once a high flyer as a supplier of graphics technology to Apple (Swiss: AAPL-EUR.SW - news)

In April, Apple (NasdaqGS: AAPL - news) said that it would no longer use Imagination's graphics technology in the iPhone, wiping out more than 60 percent of the British firm's market value.

Broker action also lifted shares in industrial machinery firms Rotork (Frankfurt: RO41.F - news) and Alfa Laval (LSE: 0NNF.L - news) , which rose 3.6 percent and 3.9 percent respectively following double upgrades from Morgan Stanley to "overweight".

The broker said that it was positive on forecasts for Alfa Laval's divisions, and saw growth potential for Rotork's products. (Reporting by Kit Rees, Editing by Vikram Subhedar and Toby Davis)