* European shares tread water
* Sanofi-Ablynx deal send Belgian biotech firm soaring
* AMS leads rally in chipmakers after raising outlook (Adds details, quotes)
LONDON, Jan 29 (Reuters) - Stellar results from chipmaker AMS and another big pharma deal dominated European share trading at the start of a heavy earnings week.
The euro, whose strength had crimped stocks late last week, eased back from its highs, but Europe's STOXX 600 index stayed flat as investors held their breath for the results rush.
Germany's DAX and euro zone stocks inched back 0.1 percent while Italy's benchmark also held steady, with most of the activity underneath the benchmarks.
"Some people are recalculating what the euro's strength means for our earnings," said Martin Moeller, co-head of Swiss and global equity portfolios at UBP in Geneva.
"What kind of outlook do you give with the dollar at $1.25? I think companies will be more hesitant," he added.
Austria's AMS soared 25 percent after its 2017 revenue doubled and the iPhone component supplier raised its growth forecasts far beyond analyst expectations.
"The clear message from these results is that we have these negative headlines about the iPhone 10 but it's of course not the only client of AMS," Moeller said, referring to a JP Morgan note last week saying iPhone X orders are weakening, which had hit the stock.
Peers Dialog Semiconductor, STMicro, and Infineon all rose, gaining between 1.1 and 5 percent, led by Dialog, whose shares have tumbled since late November.
Sanofi muscled Novo Nordisk out of the way to buy Ablynx, clinching a 3.9 billion euro deal for the Belgian biotech firm.
"The acquisition has some obvious strategic value with Ablynx's most advanced product in development," said Liberum analysts. "Sanofi can use its existing and recently acquired platform Bioverativ to help to commercialise the asset."
The French pharma giant's shares edged down 0.1 percent as traders digested the hefty price tag of 45 euros per share, against Ablynx's closing price of 39 euros on Friday. The offer was a 109 percent premium to Ablynx's share price prior to Novo Nordisk's bid on Jan 8.
Ablynx shares shot up 21 percent at their open at 0930 GMT.
Shares in Swedish medical technology group Getinge sank 8.4 percent to the bottom of the STOXX after it reported fourth-quarter profit far below market forecasts, and said 2018 results would be affected by currency transactions.
Spain's Bankia fell 3.5 percent after reporting a fourth-quarter loss of 235 million euros ($292 million) due to one-off restructuring costs after its acquisition of smaller lender BMN.
Overall, European stocks kept a decisive cyclical tilt, with miners, autos, financial services and tech stocks all gaining while utilities, food and beverage and real estate stocks slipped.
(Reporting by Helen Reid; editing by Tom Pfeiffer and Toby Chopra)