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UPDATE 1-European stocks fall after Fed cools mood

Amy Caren Daniel and Medha Singh

(For a live blog on European stocks, type LIVE/ in an Eikon news window)

* Fed's Powell, Bullard quash bets on half-point July rate cut

* Chipmakers up after Micron's results beat

* Thyssenkrupp up on report of possible offer for unit

* Adidas gains after Berenberg upgrades to 'buy' (Adds comment, updates prices)

June 26 (Reuters) - European shares fell for the fourth straight session on Wednesday, as bets on an aggressive half-point cut in U.S. interest rates next month collapsed following a more measured than expected message from Federal Reserve officials.

Fed Chair Jerome Powell said on Tuesday the central bank is "insulated from short-term political pressures", pushing back on pressure from President Donald Trump to cut interest rates and saying a cut next month is not locked in.

Markets still firmly expect the U.S. central bank to ease policy but comments from Powell and others were enough to weaken bets on the decisive new support for growth that has driven stock markets 4% higher this month.

The pan-European STOXX 600 index fell 0.3% by 0756 GMT. Banking stocks, which unlike consumers, retailers or manufacturers tend to benefit from higher interest rates, outperformed.

"There is a lot of digesting of Fed commentary from last night. Both Powell and (St Louis Fed chief James) Bullard poured cold water over expectations for a more than 25 bps rate cut in July," said Mark Taylor, sales trader at Mirabaud Securities in London.

"If you look at expectations for the full year we're still at around three rate cuts, so the longer picture is unchanged, it's the dialling back of some of the expectations which is partly behind the reason for the rotations we're seeing."

European markets saw their biggest sell-off in more than two years in May, hit by a cocktail of concerns over trade tensions, the global economic cycle and Brexit, and traders say the mood is still shaky.

The next big set piece is this weekend's G20 summit, starting on Friday, eyed for a return to top level talks between the United States and China on the trade tensions that have dominated stock market thinking for the past year.

One bright spot was better-than-expected results overnight for one of the chip world's big players, U.S.-based Micron Technologies. That supported semiconductor companies globally, with European players Infineon, Siltronic , and Ams AG up between 0.7% and 3.5%.

"That's a relief move but I'm not sure if it's going to have huge amount of legs going forward unless the European chipmakers can say something similar in their outlook as we go through earnings season," Taylor said.

Energy stocks gained 0.5%, posting the biggest gains among major European sectors, as oil prices rose 1% in the face of worries about U.S.-Iran relations.

German industrial conglomerate Thyssenkrupp gained 3%, and was among the biggest gainers on the main index, on a report of a possible offer from Kone for the company's elevator business.

Following closely behind, Adidas rose 2.4% after Berenberg raised its rating on the sporting goods company's shares to "buy". (Reporting by Amy Caren Daniel in Bengaluru; editing by Patrick Graham)