UPDATE 3-European shares slump as Apple warning hammers China-reliant sectors

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* Resources, automobile sectors worst performers

* Apple suppliers tumble

* Utilities, real estate benefit from defensive buying

* Italian stocks at highest since 2008

* Intesa Sanpaolo makes bid for UBI Banca

(Updates with closing prices)

By Susan Mathew

Feb 18 (Reuters) - European shares dropped on Tuesday as a revenue warning from Apple hammered iPhone parts makers and underlined the impact of the coronavirus outbreak on global supply chains.

However, the pan-European STOXX 600 index .STOXX ended off session lows helped by defensive buying as well as merger activity among Italian banks.

Milan shares .FTMIB closed at their highest in over a decade as Intesa Sanpaolo's ISP.MI 4.86 billion euro ($5.26 billion) bid for smaller rival UBI Banca UBI.MI sparked hopes of much-awaited consolidation among other Italian banks. banking index .FTIT8300 jumped 1.6% to close at a 1-1/2 year high, with UBI Banca soaring 24%.

Stock markets globally slid on Tuesday after Apple AAPL.O said it would miss its March-quarter sales outlook due to the epidemic, which has killed over 1,800 people and forced businesses to shut operations.

After falling up to 0.9% during the session, the STOXX 600 closed 0.4% lower, retreating from Monday's record highs.

"Investors are clearly very keen to keep buying," said Connor Campbell, analyst at financial spread better Spreadex. "It took something like a warning from Apple that investors weren't willing to ignore."

Shares of AMS AG AMS.S , Dialog Semiconductor DLGS.DE and STMicroelectronics NV STM.MI , which supply components to Apple, fell over 1.2%. Other chipmakers also dropped, taking Europe's technology index .SX8P down 0.7%.

Germany's Infineon IFXGn.DE said it has so far seen only a minor impact on business from the virus. Its shares were down 2.2%, while Frankfurt's main index .GDAXI fell 0.8%. China-exposed sectors such as automobile .SXAP and basic materials .SXPP were the worst hit on the day.

Miner BHP Group BHPB.L dropped 1.4% after missing half-year profit estimates and flagging a risk from the coronavirus outbreak, while Glencore GLEN.L slid 4.5% after posting its first annual loss since 2015. shares RENA.PA slipped 6% after a UBS price target cut. The company had announced cost cuts last week. lender HSBC Holdings HSBA.L slid 6.6% after it said it would shed $100 billion in assets and cut 35,000 jobs over three years as part of a reorganisation. It also said the coronavirus epidemic had significantly impacted staff and customers. the data front, a survey on Tuesday showed German investor morale deteriorated far more than expected in February on worries of the outbreak impacting world trade. Manufacturing PMIs from the eurozone on Friday will be keenly watched for more insights into the economic fallout from the epidemic. sectors such as utilities .SX6P and real estate .SX86P were among the few gainers.

Among bright spots, food ingredients company Kerry Group KYGa.I touched an all-time high after saying it hopes to return its five Chinese factories to full capacity within weeks.