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Sept 5 (Reuters) - European shares extended their rally on Thursday, after China said it would hold trade talks with the United States, raising hopes that the two sides will make progress on a dispute that has put major economies at a risk of recession.
China's Commerce Ministry said its trade team will consult with their U.S. counterparts in mid-September in preparation for negotiations in early October, and both sides agreed to take actions to create favourable conditions.
The pan-European STOXX 600 index rose 0.63% by 0710 GMT to touch its highest level since Aug. 1, after rallying 0.9% in the previous session.
France's CAC 40 index jumped 0.79% to hit a more than one-month high, outperforming major European bourses, helped by a 6% rise in shares of engine maker Safran after the company raised its full-year profit forecasts.
Weighing on sentiment was data that showed German industrial orders fell more than expected in July on weak demand from abroad, suggesting manufacturers in Europe's biggest economy continue to struggle in the third quarter. (Reporting by Amy Caren Daniel in Bengaluru; Editing by Sriraj Kalluvila)