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* Swedish stocks hit by a raft of weak results
* Swiss stocks outperform as Swatch results help
* Oil, banks hit STOXX 600(Updates to close)
By Sruthi Shankar and Amy Caren Daniel
July 17 (Reuters) - European stock markets lost ground onWednesday after three straight days of gains, with Swedish shareprices hit by a slew of poor quarterly results and oil majorsacross the region reeling from this week's slide in oil prices.
The pan-European STOXX 600 ended down 0.4%, withStockholm-listed shares suffering their biggestpercentage loss since May on falls for Ericsson,Swedbank and engineering group Alfa Laval.
European banks underperformed broadly as quarterly resultsfrom Wall Street lenders raised questions about the sector'sprofitability going forward if major central banks proceed withmore cuts in interest rates to fight a global slowdown.
"The fear is that if they (net interest margins) aresoftening, what is it going to look like if we do get theseinterest rate cuts," said David Madden, market analyst at CMCMarkets in Britain.
"The perception is that banks are going to be under pressureand that is going to spread out in the sector as a whole."
Traders expect the U.S. Federal Reserve to embark on a newcycle of monetary easing next week, while the European CentralBank is also expected to keep the door open to more stimulusmeasures as trade disputes take a toll on growth.
After a bullish six weeks driven by expectations of a seriesof those kinds of moves, however, doubts have begun to emergeabout whether the U.S. economy, for example, may really need asmany as the three quarter-point rate cuts markets have beenpricing in.
At the same time, investors remain deeply concerned aboutPresident Donald Trump's trade wars and their impact on growth.Trump said on Tuesday that a deal with China was a long way offand that he could still impose tariffs on an additional $325billion worth of Chinese goods if needed.
"There is a small bit of fear in relation to Trump'scomments. It showed that the trade deal was unresolved andencouraged profit taking," said Madden.
The biggest percentage loser among European sectors was theoil and gas sector, down 2%, as energy heavyweights BPand Total were hit by the slide in the oilprice to a one-week low on Tuesday.
Swiss stocks were a bright spot with shares inSwatch jumping 6%, its strongest performance in morethan six years after the watchmaker issued a positive outlookfor its biggest markets.
Dutch chipmaker ASML also rose 5.2% after itreported better-than-expected quarterly results and kept to itsforecast of solid growth for the rest of the year.
The banking sector fell 1.5%, led by Swedish banks.Handelsbanken fell on poor results, while Swedbankslipped after cutting its shareholder pay-out policy.
Ericsson fell about 12%, the most on the STOXX 600, afterwarning costs related to winning new contracts for its networkbusiness would hit profit margins later this year.(Reporting by Sruthi Shankar and Amy Caren Daniel in Bengaluru;Editing by Arun Koyyur and Edmund Blair)
