UPDATE 2-European shares extend trade driven slide to third day

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* German industry orders show recovery in June
* Vivendi rallies on talks to sell UMG stake
* Rolls Royce falls after hiking cost estimate

(Updates to close)
By Susan Mathew
Aug 6 (Reuters) - European shares finished lower on Tuesday
weighed down by trade worries as support from upbeat German data
and China stepping in to stabilise its currency proved to be
temporary.
After trading higher for most of the session and gaining up
to 0.7%, the pan-European stocks benchmark STOXX 600 index
.STOXX closed 0.5% lower, extending a trade driven rout to a
third session.
"The bounce that we saw in the morning was not necessarily
well founded so therefore it is duly fading as we get to the
close," said City Index analyst Ken Odeluga.
The brief bounce after a two-day sell-off was spurred by
China's central bank fixing the yuan at a slightly stronger rate
on Tuesday, allaying fears that Beijing would use its currency
as the new front in its trade battle with the United States.
CNY/ MKTS/GLOB
"This sends a signal that contrary to initial perceptions we
may have got from China, there is not necessarily a desire to
see the yuan slump out of control even if that may have some
benefits that offset the negatives with respect to the trade
conflict," Odeluga said.
Fears of the trade war between the United States and China
turning into a currency battle had spooked investors on Monday
as Beijing let the yuan slip below a key 7 to dollar level after
U.S. President Donald Trump threatened last week to slap a 10%
tariff on the remaining $300 billion of Chinese imports.
This revived concerns that the trade war, which has already
disrupted supply chains and contributed to a slowdown in global
growth, would worsen and get more protracted to end a steady
recovery in stocks over the last two months
London's FTSE 100 index .FTSE packed with miners and
commodity-focused firms who are heavily exposed to Chinese
demand, fell 0.7% to a two-month low, while Germany's DAX
.GDAXI reversed a 1% jump to close down 0.8%.
Data that German industrial orders exceeded expectations had
also supported sentiment earlier in the day. The industrial
sector was among top performing major sectors before markets
turned lower.
In company news, Metro B4B.DE was the worst performer on
the main index, down 8.1% after Czech businessman Daniel
Kretinsky's investment vehicle confirmed it would not raise its
5.8 billion euro bid for the German retailer.
British aero-engine maker Rolls Royce plc RR.L followed
with its 6.9% decline as it raised its cost estimates.
Vivendi shares VIV.PA jumped on news that it may sell a
10% stake in Universal Music Group to Chinese tech group Tencent
0700.HK , while industrial group Rotork Plc ROR.L topped
STOXX 600 on posting strong first-half results.