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UPDATE 2-European shares end week on dour note as trade woes linger

By Sagarika Jaisinghani and Shreyashi Sanyal

* Traders nervous about China's response to U.S. HK law

* Trade-sensitive autos, miners lead declines

* German shares shrug off upbeat unemployment data

* Norway's DNB slips after police investigation

* Britain's Ocado logs best day since February (Updates to close)

By Sagarika Jaisinghani and Shreyashi Sanyal

Nov 29 (Reuters) - European shares ended the week with their worst day this month as a clutch of fairly upbeat economic data on Friday failed to assuage investor concerns about a setback in Sino-U.S. trade talks after China's rebuke over a U.S. law on Hong Kong.

The pan-European STOXX 600 index fell 0.4%, but still posted its biggest weekly gain in three on a boost from positive trade headlines in earlier sessions.

Trade-sensitive miners and auto parts makers shed more than 1% each on Friday, while export-laden Frankfurt shares dipped 0.1% even as unemployment in Germany - Europe's powerhouse - unexpectedly declined in November.

Investors also shrugged off data showing euro zone inflation accelerated faster than expected in November, as analysts warned the figures were unlikely to suggest that a wider economic downturn in the trading bloc was bottoming out.

"We shouldn't get carried away," said Jack Allen-Reynolds, senior economist at Capital Economics.

"One-off factors have caused services inflation to spike in the past before falling back again. And other data released this morning suggest that wage pressures - one of the main drivers of services inflation - are easing."

European shares crawled toward a record high earlier this week on signs of progress in U.S.-China trade negotiations, but sentiment dulled on Thursday as a U.S. law backing pro-democracy protesters in Hong Kong drew a warning of "firm counter measures" from Beijing.

"This Hong Kong bill is a different dimension to the trade angle and it could potentially cause some very serious damage to the trading relations between the United States and China," said David Madden, analyst at CMC Markets.

Traders had earlier expected an initial trade agreement to be signed by mid-November. In the absence of a deal, U.S. tariffs are due to take effect on Chinese imports on Dec. 15.

In corporate news, Norway's largest bank DNB fell 6% to its lowest level in more than a month after police said they were investigating whether any laws were broken in its handling of payments from an Icelandic fisheries firm to Namibia. DNB has denied wrongdoing and said it is cooperating with the Norwegian police investigation.

The stock closed at the bottom of the STOXX 600 index in its busiest day in three years.

In a bright spot, British online grocer Ocado jumped 10% in its best day since February, as the company signed its first deal in Asia with Japan's Aeon. (Reporting by Sagarika Jaisinghani in Bengaluru, Editing by Sherry Jacob-Phillips and Alison Williams)