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March 28 (Reuters) - European shares edged higher on Thursday as signs of progress in U.S.-China trade talks offset nerves over global growth and Britain's chaotic path towards leaving the European Union.
The pan-region STOXX 600 index edged marginally higher with Paris and Frankfurt's traditionally trade-sensitive index rising while Milan fell.
Britain's exporter-heavy FTSE 100 outperformed as sterling took a hit after Prime Minister Theresa May failed to sway hardline opponents of her EU divorce deal by offering to quit, leaving the Brexit process deadlocked.
The FTSE 250 midcap index of more domestically-focussed stocks rose 0.4 percent with Dublin's ISEQ , typically sensitive to Brexit news, rising 0.6 percent.
Efforts to persuade lawmakers to back May's deal will continue on Thursday but it remains uncertain how, when or even whether the United Kingdom, the world's fifth-biggest economy, will leave the EU.
Sliding bond yields, and what they say about expectations for global growth, continued to worry investors and hurt risk appetite.
European banking stocks slipped 0.8 percent, led by Swedbank, which extended losses from a 12 percent fall in the previous session, driven by concerns over an investigation into suspected fraud after a raid on the Swedish bank's headquarters in an inquiry into its handling of money-laundering.
U.S. officials told Reuters on Wednesday the United States and China had made progress in all areas in trade talks, although there was no definite timetable for a deal.
Personal and household goods led gains on the main European bourse with tobacco stocks Imperial Brands British American Tobacco clocking in more than 2 percent gains.
Auto stocks fell from a rally fuelled by M&A hopes on Wednesday as Fiat Chrysler Automobiles slid 1 percent after Nissan Motor Co CEO said he was not aware of discussions about the possibility that its French partner Renault SA was considering a bid for the company.
Adding to its woes, the Italian carmaker's German rival Volkswagen said it was not interested in a tie-up with the company.
Germany's Bayer fell 2 percent as a U.S. jury awarded $80 million to a man who claimed his use of the company's glyphosate-based weed killer Roundup caused his cancer.
German construction co Hochtief slumped over 7 percent, the most on the STOXX after news of share sale by Atlantia
Reporting by Agamoni Ghosh and Medha Singh; Editing by Janet Lawrence