Tech leads European shares lower as Ericsson, ARM disappoint

* FTSEurofirst 300 down 0.5 pct, Euro STOXX 50 down 0.7 pct

* Results from ARM, Ericsson (Xetra: ERCA.DE - news) cast shadow on tech earnings

* Primark gives Associated British Foods (LSE: ABF.L - news) a lift (Updates prices, adds quote, detail)

By Francesco Canepa

LONDON, April 23 (Reuters) - European shares snapped a three-day winning streak on Wednesday, with tech stocks hit by disappointing results from Ericsson and chip designer ARM Holdings, casting fresh shadows on the sector's earnings picture.

Shares in telecoms equipment maker Ericsson slumped 6 percent, wiping the most points off the FTSEurofirst 300, after the Swedish firm missed with its first-quarter sales and profit forecasts, blaming weak revenues from North America.

ARM Holdings (LSE: ARM.L - news) , whose chip technology powers Apple (NasdaqGS: AAPL - news) 's iPhone, fell 2.8 percent after seeing lacklustre royalty revenue growth in the first quarter.

While both companies expected improvement in the remainder of the year, their weak results contributed to a disappointing first-quarter earnings season for the tech sector so far.

All tech companies in the STOXX Europe 600 index which have reported through April 22 missed revenue estimates, StarMine data showed.

The STOXX Europe 600 tech index was down 1.3 percent on Wednesday.

"The market has quickly adjusted and understood that for European companies the Q1 reporting season will not be a particularly strong one," Bernd Laux, an analyst at Kepler Cheuvreux, said.

"I have relatively strong confidence in this forecast of improvement but admittedly the risk is increasing due to the dependence on the Christmas business."

Overall, earnings news was mixed, continuing a theme of the season so far where 53 percent of STOXX Europe 600 companies that have reported results have beaten or met expectations.

The top riser was Associated British Foods, which surged 9.2 percent after it met forecasts, gave a bullish outlook for full-year profits and got a boost from its Primark clothing business.

Valuations on the STOXX 600 are at their highest since 2005 following a rally since mid-2012, and investors are looking for profits to rebound to support elevated prices.

"Earnings has to be the major driver. Generally the market is quite wary of this reliance on earnings growth this year, and it could be quite volatile until the second half of the year," said Veronika Pechlaner, who helps manage $13 billion of assets at Ashburton Investments.

The pan-European FTSEurofirst 300 was down 0.5 percent at 1,339.28 points at the provisional close, after surging 1.3 percent on Tuesday. The Euro STOXX 50 was down 0.7 percent at 3,178.99 points.

The indexes extended losses in the afternoon after data showed new U.S. home sales tumbled more than expected in March, to an eight-month low, while the U.S. manufacturing sector expanded at a slightly slower-than-expected pace in April.

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today's European research round-up (Additional reporting by Alistair Smout; Editing by Susan Fenton)