UPDATE 2-Tariff threats on EU goods do little to curb gains in European shares

* U.S. proposes $4 bln in additional tariffs on EU goods
* Galapagos jumps after submitting NDA to U.S. FDA
* Italian utilities rise on falling 10-year government bond
yields

(Updates to close)
By Susan Mathew and Sruthi Shankar
July 2 (Reuters) - European shares closed comfortably higher
on Tuesday, with utilities and consumer stocks leading gains as
investors brushed aside U.S. President Donald Trump's threat to
impose tariffs on an additional $4 billion of EU goods.
The pan-European STOXX 600 index .STOXX rose 0.4% in muted
volumes, adding to its 0.8% rise on Monday after the United
States and China agreed to return to the negotiating table after
a breakdown in trade talks in May.
Europe's main indexes had a subdued start on Tuesday as
investors turned skeptical about a U.S.-China trade deal after
Trump said any trade deal with China would need to be "somewhat
tilted" in favour of the United States.
Offering little respite, the U.S. government on Monday
ratcheted up pressure on Europe by releasing a list of
additional products - including olives, Italian cheese and
Scotch whiskey - that could be hit with tariffs. Trade-sensitive German shares .GDAXI underperformed. But
investors largely seemed to have digested the news already, with
the food and beverage index .SX3P among the top gainers, up
1.2%. "EU tariffs are just a comment, not any actuality," Keith
Temperton at Tavira Securities said.
"So for now it's fairly unimportant and tiny anyway,"
Temperton said, adding the additional tariffs would be "a drop
in the ocean."
Planemaker Airbus AIR.PA , however, fell 0.3% as further
tariff threats become the latest salvo in a long-running dispute
over aircraft subsidies.
The STOXX 600 index had its worst performance in more than
two years in May after a sudden escalation in U.S.-China trade
tensions.
But stocks recouped most of their losses since then on hopes
that major central banks would be more accommodative to counter
the impact of the dispute. Developments on the trade front and
central bank follow through will determine if July can maintain
the momentum.
Utility stocks .SX6P which tend to fare better in a
falling interest rate environment rose 1.9% on Tuesday, with
Italian firms Italgas IG.MI Terna TRN.MI and Hera HRA.MI
up between 2.2% and 3.5% as 10-year government bond yields fell
below 2%. Milan's main index .FTMIB rose 0.7% with data showing that
2019 budget deficit was smaller than forecast.
This assuaged investor concerns as it meant the country
probably complied with European Union fiscal rules this year and
could possibly avoid disciplinary action over its growing
debt. Galapagos' shares GLPG.AS jumped 5.2% to scale a record
high on positive news from its partner Gilead GILD.O on a
rheumatoid arthritis drug.
Meanwhile, Jupiter Fund Management JUP.L dropped 8.5% as
investors booed its plan to consider naming Devon Equity as an
adviser for its European Opportunities Trust.