UPDATE 2-Trade worries plague European shares, FTSE underperforms

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* STOXX 600 hit lowest since Feb 11
* China vows retaliation to U.S. tariffs
* Strong pound, falling oil prices, ex-div stocks weigh on
FTSE
* Carlsberg, ICA up on upbeat earnings

(Updates to close)
By Susan Mathew and Shreyashi Sanyal
Aug 15 (Reuters) - European shares hit six-month lows in a
volatile session on Thursday, with London stocks losing more
than 1%, as China warned of retaliation against U.S. tariffs,
heightening fears of the continued impact of their trade war on
global growth.
But the pan-European STOXX 600 index .STOXX made up for
some losses after U.S. stock futures turned positive and strong
retail sales numbers from the United States subsequently helped
Wall Street open higher. .N
The STOXX 600 closed down 0.3%, having fallen as much as
1%earlier in the session to its lowest since Feb. 11.
China on Thursday vowed to counter the latest U.S. tariffs
on $300 billion of Chinese goods but called on Washington to
meet it halfway on a potential trade deal, as President Donald
Trump said any pact would have to be on the United States'
terms. Trump said on Wednesday he would strike a trade deal with
China only after China found a humane resolution to weeks of
protests in Hong Kong. "It's the trade war which is driving markets right now,"
said Craig Erlam, senior market analyst at Oanda. "The speed in
which this trade war has ramped up in the past few weeks is
considerable even by its own standards."
"Investors are just very sensitive to anything negative on
trade," he said.
Stocks have had a rollercoaster ride over the past two
weeks, buffeted by new U.S. tariff threats on China, their
subsequent postponement, recession fears, political turmoil in
Italy and the unrest in Hong Kong.
If falls were to continue at this pace, Europe's main index
could fall beyond May's 5.7% slump which was the most in more
than three years.
Weighing on the benchmark index the most on Thursday was a
drop automakers .SXAP and commodity stocks .SXPP , the
sectors that tend to fall the most during trade uncertainties
due to their reliance on exports and demand from China.
Lower oil prices pressured oil stocks .SXEP which weighed
on London's FTSE 100 .FTSE along with several heavyweight
stocks that traded without dividend entitlement. A rally in the
pound on strong UK retail sales also added to the FTSE's
woes. GBP/
In earnings news, strong numbers from beer maker Carlsberg
CARLb.CO and food retailer ICA ICAA.ST pushed shares of both
companies to the top of the pan-region index.
Shares in Danish facility services provider Iss ISS.CO
were at the bottom, extend losses following quarterly results,
with analysts pointing to concerns over free cash flow.

Markets in Italy, Austria and Greece were shut for a public
holiday.