European shares buoyant, shrugging off trade war worries

* STOXX 600 up 0.2 pct at close

* U.S.-China trade dispute escalates

* Inmarsat (Other OTC: IMASF - news) falls after rejecting bid (Adds detail, updates prices at close)

By Julien Ponthus and Kit Rees

LONDON, July 6 (Reuters) - European shares climbed on Friday as traders said an escalating trade dispute between the United (Shenzhen: 000925.SZ - news) States and China - with U.S. tariffs on $34 billion in Chinese imports taking effect and China immediately retaliating - was factored in to prices.

The pan-European STOXX 600 index was up 0.2 percent at its close while Germany's exporter-heavy DAX rose 0.3 percent.

While European stocks spent part of the afternoon in negative territory after the euro jumped following strong U.S. jobs data, the STOXX 600 ended the session broadly where it had begun.

"We're in a typical 'buy the rumour, sell the news'," scenario, said Stephane Barbier de la Serre, strategist at Makor Capital Markets, when asked why markets were not falling given the trade dispute was moving unequivocally towards a trade war.

According to Barbier de la Serre, many investors still want to believe the European Union will stay on the sidelines of the trade war or that the U.S. confrontation with China is just a negotiating position that will not lead to a fall in global trade.

He also noted that, with high hopes for the new corporate earnings season beginning in less than two weeks, many traders were reluctant to short European stocks.

Second-quarter earnings for STOXX 600 companies are expected to increase 8.7 percent from the same period last year, according to data from Thomson Reuters I/B/E/S.

However, sectors that have been hit recently by the escalation in trade tensions, such as autos and commodities-related stocks, were on the backfoot, suggesting investors weren't willing to dive into more risky areas of the market for now.

Among individual stocks, shares in Britain's Inmarsat (LSE: ISAT.L - news) posted the worst performance and fell 8 percent after it rejected a takeover offer from Echostar.

Swedish lock maker Assa Abloy (LSE: 0R87.L - news) also fell sharply, down 6.1 percent after reporting a one-off writedown of 6 billion crowns ($686 million) on its Chinese business.

Altice Europe jumped 3.7 percent as speculation about potential mergers within the French telecoms industry are resurfacing and French conglomerate Bouygues (LSE: 0HAN.L - news) said it was ready to seize opportunities to beef up its telecoms business.

Germany's Thyssenkrupp (IOB: 0O1C.IL - news) was up 2.4 percent after its CEO offered to step down, bowing to growing investor pressure for a more radical restructuring of the group.

Shares (Berlin: DI6.BE - news) in French investment group Eurazeo (LSE: 0HZC.L - news) jumped nearly 5 percent, among the STOXX 600's best performers, after HSBC lifted its rating for the stock. (Reporting by Julien Ponthus and Kit Rees; Editing by Mark Potter)