UPDATE 2-European shares retreat from 12-month highs on Hexagon outlook, dimmer rate cut hopes

* Hexagon slips after Q2 sales warning

* Chipmakers weak after Samsung's forecast

* German industrial orders weaker than expected in May

* Strong U.S. jobs data dims hopes of 50 bp cut by Fed (Updates with closing prices, edits)

By Susan Mathew and Medha Singh

July 5 (Reuters) - European shares broke a six-day winning streak on Friday as poor German data and a downbeat outlook from Sweden's Hexagon weighed, and losses deepened after strong U.S. jobs data saw investors trimming bets of an aggressive rate cut by the U.S. Federal Reserve this month.

The pan-European STOXX 600 index finished down 0.7% on broad-based losses, capping the week's gains at 1.4%. The index retreated from more than 12-months highs hit a day earlier, fuelled by hopes of easier monetary policy from major central banks.

The strong rebound in U.S. job growth in June tempered expectations that the Fed would cut interest rates by 50 basis points this month, which sent the dollar higher and U.S. stocks lower.

However, bets of a 25 basis point cut were still in play as data showed wage gains in the U.S. were tepid.

"These (jobs growth) are good numbers, but a rate cut in July is still all but inevitable," said Luke Bartholomew, investment strategist at Aberdeen Standard Investments.

Hopes of accommodative monetary policy by major central banks and a U.S.-China trade truce were drivers of a fourth week of gains for the European stocks benchmark.

With talks between Washington and Beijing set to resume next week, Citi economist Catherine Mann warned that the truce had not removed the uncertainty that is still weighing on the global growth outlook.

Swedish industrial technology group Hexagon is among those suffering. It announced 700 job cuts and warned of a drop in quarterly organic sales.

One trader said the "fairly big cut for a one-month downturn" had sent shockwaves through local firms and any with exposure to China.

Hexagon shares tumbled 11% to the bottom of the STOXX 600 for their worst day in almost nine years.

That, along with news that German industrial orders had fallen far more than expected in May, weighed on industrial stocks such as Schneider Electric, Siemens and Sandvik.

The industrial goods sector was among the biggest decliners, down 1.9% in its worst session since May.

Samsung Electronics forecast a plunge in its second-quarter operating profit. citing the U.S.-China trade war, and dragged European chipmakers AMS, STMicroelectronics and Siltronic down more than 2.4%.

The tech index slid 1.3%.

Meanwhile, bank stocks, which tend to gain in a high interest rate environment, rose 0.3%. (Reporting by Medha Singh and Susan Mathew in Bengaluru; Editing by Arun Koyyur and Kevin Liffey)