UPDATE 2-European shares advance as chipmakers rally, earnings a bright spot

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Richemont jumps on Q3 sales beat

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Watches of Switzerland drops on FY forecast cut

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Upbeat TSMC results lift chipmakers

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STOXX 600 up 0.6%

(Updated at 1650 GMT)

By Shristi Achar A and Shashwat Chauhan

Jan 18 (Reuters) - European shares bounced back on Thursday following three straight sessions of losses, buoyed by Richemont and Flutter's upbeat results, while investors parsed the European Central Bank's December policy meeting minutes.

The pan-European STOXX 600 index ended 0.6% higher after falling to a six-week low in the previous session.

Supporting the benchmark index, shares of Richemont climbed 10.4% after the Cartier jewellery owner's third-quarter sales exceeded forecasts after a revenue jump in China.

Other luxury stocks, including LVMH and Kering , added 2.5% and 2.2%, respectively, boosting the personal and household good index 1.3%.

Watches of Switzerland slumped 36.7%, logging its biggest single-day percentage drop yet after the luxury retailer cut its annual revenue and profit margin forecast.

ECB policymakers meeting last month appeared confident that inflation was heading back to target but saw risks that warranted steady policy and high borrowing costs, the accounts of the December policy meeting showed.

"If we look at the minutes from the ECB, a couple of points that stand out are the acknowledgment of better than expected inflation data and an element of caution related to wages," said Georgios Leontaris, CIO - Switzerland and EMEA at HSBC Global Private Banking and Wealth in Geneva, Switzerland.

"Wages are still a little bit elevated, not just in Europe, in the UK and the U.S. also, but clearly, it was that wages element that perhaps prevented the ECB governing council to give more credence on cuts in the December meeting."

The recent remarks from policymakers to manage market expectations have caused traders to scale back rate-cut bets, with the first cut now being priced in for April instead of March.

The focus has shifted to the ECB's January policy decision, with the bank entering its quiet period before next week's meeting.

Among corporate updates, online betting giant Flutter jumped 15.3% after analysts said fourth-quarter market share gains and stronger-than-expected win margins in the fast growing U.S. market augured well for 2024.

Flutter's shares lifted the travel and leisure index up 5.2%, while Irish stocks advanced 3.9%, logging their best single day performance in over a year.

The food and beverages index was a drag, down 0.5%, led by a 1.8% fall in Campari after RBC Capital Markets downgraded the Italian spirits maker to "underperform" from "sector perform" over concerns of volatility in recent quarterly results.

The technology sector, which houses the bulk of Europe's chipmaker companies, rose 2.9%, tracking positive quarterly results from Taiwanese chipmaker TSMC . (Reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Sherry Jacob-Phillips and Barbara Lewis)