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UPDATE 1-European chipmakers tumble on iPhone demand scare

* Chipmakers Austria Microsystems and Dialog Semi tumble

* Analysts cut Apple iPhone sales forecasts

* Metals and crude prices support benchmarks

* Liquidity remains thin in holiday-shortened week (Adds detail, updates prices)

PARIS, Dec 27 (Reuters) - European tech stocks tumbled on Wednesday as the region emerged from a two-day trading holiday and investors reacted to reports that demand for Apple's iPhone X may be weaker than expected.

The pan-European STOXX 600 slipped by 0.1 percent, reversing earlier gains as a downturn in the high-performing tech sector outweighed strong mining and oil stocks.

Euro zone blue chips also fell 0.1 percent, with the index slightly down on the month and set for its second straight month of losses.

Tech stocks fell 1 percent, the worst-performing sector as the market followed a downturn in Asian iPhone suppliers after brokers cut forecasts for iPhone X shipments, saying sales of the new model may undershoot expectations.

Austria Microsystems, the best-performing European tech stock this year, sank 10 percent while fellow iPhone supplier Dialog Semiconductor dropped 5.5 percent, the biggest falls on the STOXX.

Chipmakers Infineon and STMicro fell 1.5 and 2.3 percent respectively to the bottom of the German and French benchmarks. Siltronic and BE Semiconductor also featured among top European fallers.

Despite recent weakness, tech stocks have retained a significant lead over all other sector indexes, up by about 21 percent this year.

Retail stocks, meanwhile, were set to bring up the rear as the worst-performing, down 3 percent since January.

Strength in commodities helped to cap losses across the major benchmarks as liquidity remained thin with many investors still on holiday.

Mining stocks rose after metals prices hit 3-1/2 year highs thanks to a strong outlook for growth in China.

Glencore, Randgold Resources and Anglo American contributed the most to index gains.

Oil majors also provided suport, with Total up 0.6 percent and Shell rising 0.8 percent as crude prices held near 2015 highs.

German carmakers BMW and Daimler gained 0.3 to 0.6 percent after they said late on Friday that the U.S. tax reform would boost 2017 profits to the tune of 1.55 billion euros ($1.84 billion) and 1.7 billion euros respectively.

"As only net profit is benefiting and there will be no positive impact on cash flow, we see only a minor impact on valuation of both companies," DZ Bank equity strategists wrote in a note.

Merger activity continued to spur big stock moves, with British workspace company IWG leaping by 28 percent after it confirmed a bid approach from Canadian private equity firm Onex and Brookfield Asset Management.

($1 = 0.8420 euros)

(Reporting by Helen Reid; Editing by Matthew Mpoke Bigg and David Goodman)