Escalating tariff war hits Europe's autos stocks and multinationals

* STOXX 600 down 0.7 pct

* Autos tumble on trade tariff fears

* Siemens and Airbus lead industrials down

* Multinational clothes, luxury stocks sell off

* Debenhams falls after another profit warning (Adds details, closing prices)

By Helen Reid

LONDON, June 19 (Reuters) - European shares extended a sell-off on Tuesday as a trade war between the United States and China escalated, with autos, mining and technology stocks taking the brunt.

Europe's main equity benchmark, the STOXX 600, fell for the third straight session, down 0.7 percent, after U.S. President Donald Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods, following Beijing's decision to raise tariffs on $50 billion in U.S. goods.

"For now we are talking about the U.S. and China, not Europe directly, but certainly overall it's a de-risking because global trade integrates everything," said Britta Weidenbach, head of European equities at DWS.

The STOXX 600 recovered slightly after German Chancellor Angela Merkel and French President Emmanuel Macron agreed on a euro zone budget, which traders said was a helpful show of unity.

Italian banks, up 1 percent, were further supported after the European Central Bank's top supervisor said the central bank could adopt a softer approach in pressing banks to reduce bad loans, confirming an earlier Reuters report .

Germany's DAX, home to some of the carmakers that Trump has explicitly targeted in his tariffs rhetoric, fell the most, down 1.2 percent. BMW, Daimler and Volkswagen dropped 0.8 to 2.4 percent. The STOXX 600 autos sector hit a seven-month low.

"The automotive sector is one of the main sectors that could potentially be impacted by import tariffs," said Weidenbach, adding that the impact on different German carmakers may depend on how much of their production is U.S.-based.

Europe's companies in general are more exposed to the global economy than their U.S. counterparts, making them more vulnerable to countries imposing higher tariffs on goods.

Some 18 percent of European company revenues comes from North America and 9 percent from China. Thirty-two percent is derived from emerging markets.

U.S. companies get just 4 percent of their revenues from China and 10 percent from Europe, according to Morgan Stanley.

Multinational sportswear company Adidas fell 2.5 percent, as the fear of an end to unfettered access to global markets also bruised luxury stocks Kering, Hermes , LVMH and Moncler.

Industrial conglomerate Siemens was one of the biggest drags on the STOXX, along with French planemaker Airbus .

Mining shares tumbled 2.4 percent, tracking a decline in London copper prices amid the escalating trade tensions.

Highly valued tech stocks were also selling off as investors shed the sectors that have led the strong equity rally. The tech sector fell 1.4 percent, having hit a 17-year high as recently as Friday.

The most impressive falls were in the UK retail and housing sectors. Debenhams shares plummeted 10 percent after the British department store warned on profits for the third time in six months, blaming its poor trading on increased competitor discounting and weakness in its key markets.

(Reporting by Helen Reid and Danilo Masoni, editing by Larry King)