CORRECTED-UPDATE 1-European shares muted as gains in defensives outweigh nerves on trade, Brexit

(Corrects milestone in the first paragraph to show European shares logged their steepest weekly loss in two months, not one year.)

* German industrial orders drop in August

* Osram drops after AMS fails takeover bid

* Bayer rises after Roundup lawsuit delay

By Medha Singh

Oct 7 (Reuters) - European shares were little changed in choppy trade on Monday, after their steepest weekly loss in two months, as bids in defensive shares outweighed nervousness ahead of crucial U.S.-China trade talks and Brexit negotiations.

Bayer climbed 1.3% as the company said a pending U.S. lawsuit over claims related to glyphosate-based herbicide Roundup has been delayed until further notice.

Bayer's shares helped the healthcare index climb 0.6%, while other defensive stocks popular in times of economic strife - food and beverage and utilities - were also leading gains.

By 0800 GMT, the pan-European STOXX 600 index was little changed, after it tumbled last week on tensions over transatlantic trade wars and a spate of weak U.S. and European data.

Europe's blue chip STOXX 50 outperformed, adding 0.1%.

Germany's DAX declined 0.3% after data showed industrial orders in August fell slightly more than expected, underscoring concerns of a recession in Europe's largest economy.

"European stock markets will be eyeing the trade talks and Brexit and may show little direction at the start of the week," said Neil Wilson, chief market analyst at Markets.com.

A report that said China officials are increasingly reluctant to agree to a broad trade deal with the United States, kept investors nervous ahead of the trade negotiations starting on Thursday.

"Hopes of a comprehensive trade deal being agreed this week are slim," Wilson said.

Trade-sensitive automakers dropped 1.1%, leading declines among major sectors.

Among individual stocks, Austria's AMS tumbled 4.7% after the company said it failed in its 4.5 billion euro ($4.9 billion) takeover attempt of German lighting group Osram . Osram was down 4.1%. Both were leading declines on the benchmark STOXX 600.

London-listed shares of HSBC Holdings Plc fell 1% after a report over the weekend said the banking group was planning to cut up to 10,000 jobs to lower costs.

Investors will also be looking at developments around the crucial talks between London and Brussels this week on the Brexit withdrawal deal, with a looming make-or-break Brexit summit on Oct. 17 and 18, and the Britain's EU departure set for Oct. 31. (Reporting by Medha Singh in Bengaluru; Editing by Bernard Orr)