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* STOXX 600 off 0.2%

* ASML shares drop on flat FY sales forecast

* Adidas jumps after upbeat 2023 guidance

* UK annual inflation tops expectations in Sept

* Nexi shares rally after media report of potential bid by CVC

Oct 18 (Reuters) - European stocks inched lower on Wednesday as deepening fears over an escalation in the Middle East conflict and a drop in shares of chipmakers after ASML's lacklustre forecast overshadowed support from upbeat Chinese economic data.

The pan-European STOXX 600 index was down 0.2% by 8:27 GMT, falling for the second straight day.

A strike on a Gaza hospital that killed hundreds of Palestinians raised the stakes for U.S. President Joe Biden's visit to Israel.

ASML Holding lost 1.5% as the semiconductor equipment maker reported lower-than-expected orders and warned of flat sales next year.

Shares of other chipmakers such as ASM International , Aixtron and BE Semiconductor also shed between 1.3% and 1.5%, dragging Europe's technology sector down 0.7%.

"Today, the disappointing (semiconductor) results are going to be the one dominating the news because it's a big and important sector for Europe," said Anthi Tsouvali, multi asset strategist at State Street Global Markets.

"In general, earnings expectations remain high and they seem to be very optimistic for a region which is an energy importer. If energy prices continue to climb higher, that's going to be an issue."

The burgeoning uncertainty over the Middle East war, a slew of mixed earnings reports and a jump in bond yields after better-than-expected U.S. economic data have kept European shares under pressure this week.

Adding to the declines, data showing hotter-than-expected British consumer

inflation

pushed the FTSE 100 down 0.1%.

Meanwhile, China-exposed luxury firms such as LVMH , Hermes and Richemont rose between 0.7% and 1.1% after data showed the world's second-largest economy grew faster than expected in the third quarter.

Adidas jumped 4.1% after the sportswear firm lifted its revenue forecast and cut its expected loss for 2023. The upbeat outlook also lifted shares of rival Puma by 3.3%.

Just Eat Takeaway.com climbed 6.7% as it raised its annual core profit forecast, while shares of truck maker Volvo gained 2% after posting upbeat quarterly earnings.

Energy shares were also a bright spot, up 0.5% as risks to supply from the Middle East boosted crude prices.

Industrials were a big drag, down 1.1%, with shares of ABB dropping 5.7% after the Swiss engineering group dampened expectations for the fourth quarter.

Shares of Italy's Nexi jumped 15.1% after a media report of a possible bid by CVC Capital Partners.

(Reporting by Amruta Khandekar; Editing by Sherry Jacob-Phillips and Sohini Goswami)