UPDATE 3-European stocks hit pause as trade doubts linger

* More work remains for Brexit deal - UK, EU
* Automakers up, defensives post small losses
* Banks stocks drop as treasury yields fall
* Roche, Novartis slip on fears of U.S. tariffs

(Updates to market close)
By Medha Singh and Sruthi Shankar
Oct 14 (Reuters) - A three-day rally in European shares came
to a halt on Monday as investors assessed the scale of progress
from Friday's U.S.-China trade talks and worried that a Brexit
withdrawal agreement was still some way off after earlier signs
of a breakthrough.
The pan-European STOXX 600 index .STOXX closed down 0.5%,
but erased nearly half of losses made earlier in the session as
defensive sectors gained some favour and automakers rose.
Growing optimism around Sino-U.S. trade talks and a Brexit
agreement had helped the index log its best one-day percentage
gain since early January, making the slight pullback natural.
However, a report on Monday that Beijing wanted more talks
before signing Washington's "phase one" deal added to doubts
about a trade deal, with analysts warning that nerves over a
slowdown in global growth and the Brexit process were still
high. "We need more information to determine whether the latest
developments represent a structural change in the relationship
between the U.S. and China," Bank of America Merrill Lynch's
Claudio Irigoyen wrote in a note.
"The question remains on whether a deal that is sufficiently
beneficial for both sides is within the set of feasible deals."
Late on Friday, the United States outlined the first phase
of a trade deal and suspended this week's scheduled U.S. tariff
hikes on Chinese goods, but existing tariffs remained in place
and officials on both sides said much more work was needed
before an accord could be agreed. The 15-month trade war between the world's top two economies
has sapped business confidence and disrupted supply chains
around the world. Latest data out of China showed a further
contraction in exports and imports in September. Mining .SXPP stocks, among the chief barometers of concern
over the Chinese economy, shed 2.5%, leading declines among the
European sub-sector trading in the red.
Meanwhile, a Brexit deal was hanging in the balance on
Monday after diplomats indicated the European Union wanted more
concessions from Prime Minister Boris Johnson and said a full
agreement was unlikely this week. Britain's domestically focused FTSE mid-caps .FTMC gave up
0.56% following Friday's 4% surge, while London's blue-chip
stocks .FTSE closed down 0.46%.
Bank .SX7P stocks were the biggest drag on the benchmark
STOXX 600 index, down 0.8%, as euro zone bond yields fell due to
investors pouring into the safety of fixed income.
Automakers .SXAP , edged 0.3% higher, extending gains for a
fourth session, while sectors considered stable during times of
economic uncertainties such as real estate .SX86P , utilities
.SX6P and food and beverage .SX3P cut early losses.
Among individual movers, Swiss pharmaceutical companies
Roche Holding AG ROG.S and Novartis AG NOVN.S dropped 0.4%
and 0.8%, respectively, after a report that the United States
was considering tariffs on Swiss pharmaceutical products.
Shares in Sophos Group Plc SOPH.L shot up 36% as private
equity firm Thoma Bravo said it would take the British
cybersecurity company private in a deal valuing the company at
about $3.8 billion. Shares of Jupiter Fund Management Plc JUP.L fell about 6%
with Barclays and BofA Merrill Lynch lowering their earnings
forecast after the firm said on Friday it expected to see net
outflows of 1.3 billion pounds in the third quarter.