* STOXX down for second day, ends off lows
* China unveils new tariffs on U.S. products
* WPP declines on Sorrell investigation (Adds details, closing prices)
By Danilo Masoni and Julien Ponthus
MILAN/LONDON, April 4 (Reuters) - European shares fell for a second day after China unveiled new tariffs against U.S. products, increasing concerns of an escalating trade standoff between the two countries.
China hit back quickly on Wednesday against U.S. plans to impose tariffs on $50 billion in Chinese goods, retaliating with a list of similar duties on key American imports including soybeans, planes, cars, beef and chemicals.
The pan-European STOXX 600 index and Germany's exporter-heavy DAX fell 0.5 and 0.4 percent respectively, suffering their second straight day of losses.
Both however ended off earlier lows following an initial kneejerk reaction.
"Investors might expect further escalation, but we must come back to the view that this process has all the hallmarks of a Trump negotiation where we see the president back down from the worst case scenario in return for key concessions," said ETX Capital analyst Neil Wilson.
Later on Wednesday, U.S. President Donald Trump's top economic adviser Larry Kudlow said people should not overreact to the trade actions and said they should be seen as "a negotiation, using all the tools".
The basic resources and tech sectors were worst performers with falls of 2.4 and 1.7 percent respectively, while cyclical stocks such as financials and industrials also weighed heavily.
Even though trade war concerns dampened the broader sentiment, traders said some European companies such as Airbus or Adidas could get a competitive edge against U.S. rivals in Chinese markets as a result of the tariffs.
Airbus shares fell 0.8 percent, outperforming heavy losses in its U.S. rival Boeing, while Adidas rose 1.3 percent, broadly in line with gains in U.S. peer Nike.
Elsewhere among individual stocks, WPP fell 2 percent after the advertising group said it was conducting an investigation into an allegation of personal misconduct against its chief executive, Martin Sorrell, who denied any wrongdoing.
Swiss Re fell 3.9 percent after the reinsurer said Japan's SoftBank was in talks to buy a stake which is unlikely to exceed 10 percent.
Bloomberg reported on March 29 that SoftBank was looking to buy a 25 percent stake in Swiss Re, worth about $9.6 billion, as part of its drive to broaden its investments, which include its $93 billion Vision Fund for technology projects.
German IT leasing specialist Grenke rose 3.5 percent after a positive trading update for the first quarter. (Reporting by Danilo Masoni Editing by David Holmes)