* STOXX, DAX at December 2016 levels
* Italy stocks fall after EU rejects budget
* AMS, Atos drag tech sector down
* Earnings fail to offset political worries (Adds details, closing prices)
LONDON/MILAN, Oct 23 (Reuters) - European shares fell sharply on Tuesday as disappointing company results, particularly in the tech sector and a mix of political worries including Italy's budget woes piled pressure on markets.
The pan-European STOXX 600 benchmark index fell for its fifth straight day, ending down 1.6 percent at its lowest level since December 2016, while Germany's DAX lost 2.2 percent, also at December 2016 lows.
Italy's FTSE MIB dropped 0.9 percent to February 2017 lows after the European Commission rejected the country's draft budget and asked Rome to submit a new one within three weeks.
"The euro zone found no way to staunch its bleeding as Tuesday went on; in fact, with the European Commission confirming it was rejecting Italy's budget the region's wounds only deepened," said Spreadex analyst Connor Campbell.
The European tech sector led sectoral fallers, shedding 3.7 percent after downbeat updates from Apple chip supplier AMS and French IT services company Atos .
AMS disappointed investors with its fourth quarter forecast, knocking 26 percent off the value of its shares despite the Austrian firm winning deals with other smartphone makers.
Atos cut its revenue growth forecast for 2018 on Tuesday, citing disappointing results in Germany and North America and global economic uncertainty. Its shares fell 22 percent
Also losing were Sweden's Saab, which announced a rights issue, and Finnish ship technology and power plant maker Wartsila, after a lower-than-expected quarterly profit. Their shares fell 15 and 7 percent respectively.
Among heavy weights, Germany's Bayer dropped 9.5 percent after a U.S. judge affirmed a verdict against its Monsanto unit that found Monsanto's glysophate-based weed-killers caused a mans terminal cancer. (Reporting by Danilo Masoni; Editing by Emelia Sithole-Matarise)