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* FTSEurofirst 300 down 0.1 percent
* French telecoms fall on prospect of price war
* Fresnillo drops after Q4 update
By Tricia Wright
LONDON, Jan 22 (Reuters) - European shares dipped on Tuesday, after a choppy session, as the prospect of price war in the French telecom sector outweighed signs of economic improvement in Germany.
France Telecom, Bouygues and Vivendi shed between 4.5 percent and 4 percent in brisk trading volumes after the head of Vivendi's SFR mobile operator said it was cutting prices by as much as 25 percent.
Some support came from a better-than-expected reading of German ZEW investor sentiment, up sharply for a second consecutive month in January in a sign the euro zone crisis is no longer hitting Europe's largest economy as hard as in late 2012.
The FTSEurofirst 300 closed down 0.1 percent at 1,165.49, having pared back earlier losses after a technical sell-off that started on Germany's blue-chip DAX index.
While left nursing slight losses on Tuesday, the FTSEurofirst 300 was left trading just a touch below a near two-year high of 1,170.29 hit on Jan. 10, after a robust start to 2013, which has seen the index climb almost 3 percent.
"(ZEW) helped markets move forward a little bit but I still think a lot of indices are in wait-and-see mode where markets are more or less digesting the big gains," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said.
"Also markets are waiting a bit for earnings out of the United States."
Tech companies Google Inc, International Business Machines and Texas Instruments are set to report after Wall Street's close, ahead of Apple Inc's earnings release on Wednesday.
Strategists remained optimistic about the outlook for European equities in spite of recent gains.
"Europe remains one of our overweight markets within our portfolio. Valuations are still relatively attractive with trailing price/earnings ratios at 12-1/2 which is still a full point lower than the long-term average," Patrick Moonen, a senior strategist at ING, said.
Elsewhere among fallers, Fresnillo shed 2.8 percent, with some analysts citing concerns over the potential introduction of a mining royalty in Mexico.
The company said on an analyst call after announcing annual silver production in line with its guidance, that the Mexican government could look at bringing in a royalty on net profit towards the end of this year.
"Perhaps it's that that's spooking investors," RBC analyst Jonathan Guy said, adding that the results were "decent."
Trading volume in Fresnillo stood at 230 percent of its 90-day daily average.