* STOXX down 0.5%

* Ericsson, Nokia fall after reports on Nvidia ( NVDA ) 6G push

* Italian lenders in spotlight

(Updates with closing levels)

By Utkarsh Hathi, Johann M Cherian and Ragini Mathur

June 9 (Reuters) - European shares surrendered early gains

on Tuesday to close lower for a third straight session, led by

declines in commodity-linked stocks as investors weighed a

fragile Iran-Israel ceasefire.

The pan-European index STOXX 600 edged down 0.5% to

618.64 points, with miners and energy stocks

leading losses, down 2.5% and 2.4%, respectively.

Sentiment around the Middle East conflict remained cautious.

U.S. Energy Secretary Chris Wright said ship traffic through the

Strait of Hormuz, a key global energy route, was rising "very

meaningfully".

Hopes for a durable easing in tensions were tempered after

Israel struck the historic port city of Tyre in southern Lebanon

on Tuesday, killing at least eight people. Tehran had warned on

Monday it would resume hostilities if Israel continued attacks

on its ally Hezbollah in Lebanon.

"The markets have been moving in a holding pattern for the

last week or two, with what's happening in the Middle East and

smaller impact from some of the AI driven volatility that we're

seeing in Asian and U.S. markets," said Craig Cameron, portfolio

manager at Franklin Templeton.

LENDERS JOSTLE FOR MARKET SHARE

European technology stocks, which have seen bouts of

volatility recently, showed signs of steadying earlier in the

session but ended 1.3% lower, tracking Wall Street peers.

Even so, the sector remains set for the strongest quarterly

gain on the STOXX 600.

In corporate moves, Italy's financial sector stayed in focus

after Monte dei Paschi di Siena received rival buyout

proposals from Intesa Sanpaolo and Banco BPM,

as lenders jostle for market share in the euro zone banking

sector.

Intesa also unveiled a separate plan to sell 635 MPS

branches and the brand to insurer Unipol, a move aimed

at easing competition concerns.

MPS gained 2.6%, while Banco BPM and Intesa rose about 1%

each. BPER Banca and Unipol advanced 4.7% and 2.9%,

respectively.

ECB ACTION

The European Central Bank is widely expected to raise

interest rates by 25 basis points on Thursday as inflation

worries persist, though investors will be watching closely for

guidance on how much further policymakers may go.

"It looks likely that the ECB will act, but it certainly

won't want to over-egg the pudding. It won't want to make policy

decisions that are too tight and risk dampening growth further,"

said Susannah Streeter, chief investment strategist at Wealth

Club. "The outlook is probably going to be one of 'let's wait

and see now'."

Among other sectors, telecoms fell 2%, with Ericsson

and Nokia among the STOXX 600's biggest

decliners after traders cited a report warning of potential

risks from Nvidia ( NVDA ) developing technology for future

mobile networks.

Defence stocks dropped 0.7% after Morgan Stanley

downgraded European defence shares to equal-weight for the first

time in more than two years, citing downward earnings revisions.