UPDATE 2-U.S.-China tension, virus worries weigh on European stocks; Centrica soars

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* STOXX 600: worst session in one month, first weekly loss
in 4
* Tech stocks lead losses
* German manufacturing sector avoids contraction in July
* Centrica surges ~17% on $3.63 bln deal to sell unit
* Signify jumps on 62% rise in Q2 profit

(Updates to close)
By Susan Mathew
July 24 (Reuters) - European shares posted their biggest
session drop in a month on Friday as global sentiment soured
after Beijing ordered the United States to close its consulate
in a Chinese city in retaliation to similar move by Washington.
With all sectors trading in the red, technology stocks
.SX8P such as SAP SAPG.DE and ASML ASML.AS led losses
following a continued sell-off in U.S. peers. .N
The pan-European STOXX 600 index .STOXX fell 1.7%, pushing
it to a weekly loss for the first time in four weeks. Increasing
global COVID-19 cases also weighed as investors worried that
containment measures may reverse a pick-up in business activity.
PMI data on Friday showed Germany's manufacturing sector
avoided contraction for the first time in 19 months in July,
while euro zone data showed business activity in the bloc had
returned to growth. "The sharp rise in the euro-zone Composite PMI is an
encouraging sign that economic recovery continued at a decent
pace at the start of the third quarter," said Jack
Allen-Reynolds, a senior Europe economist at Capital Economics.
"But we suspect that activity will remain below pre-crisis
levels for at least the next couple of years," he said, pointing
also to employment PMIs remaining well below 50 - the mark
separating contraction from growth, suggesting recovery in
output hasn't stopped firms from letting workers go.
Germany's DAX .DAX slumped 2%, while London blue-chips
.FTSE hit two-week lows with investors looking past data that
showed strong June UK retail sales. .L
A 750-billion euro EU recovery fund and hopes of an eventual
COVID-19 vaccine had put European stocks on course to end the
week higher, until a U.S. order to shut the Chinese consulate in
Houston over accusations of spying, prompting a tit-for-tat move
by Beijing, ordering the closure of the U.S. consulate in
Chengdu. The STOXX 600 ended the week down 1.5%. British Gas owner Centrica CNA.L surged 16.8% to post its
best session in two decades, as it announced plans to sell its
North American business Direct Energy to NRG Energy for $3.63
billion. In earnings, Equinor EQNR.OL climbed 4.6% as a strong
performance from its refinery and trading business helped the
group beat forecasts for a loss, while plumbing supplier
Ferguson FERG.L rose as the pace of decline in sales at it
main U.S. operations slowed in the May to July period.
A 62% jump in second-quarter net profit saw lighting maker
Signify LIGHT.AS jump 5.7%. Next week, results from luxury good stocks .SXQP will be
watched. Louis Vuitton owner LVMH LVMH.PA is expected to have
weathered the coronavirus crisis better than most rivals.