* STOXX 600 down 0.3 pct, DAX down 0.5 pct at close
* Trade-sensitive miners fall; autos recover
* Real estate stocks tumble on MS downgrade
* Bouygues rises on results (Adds detail, updates prices at close)
By Helen Reid
LONDON, Aug 30 (Reuters) - European shares fell back on Thursday as weakness in Chinese markets and worries over a trade dispute between the United States and China eclipsed optimism that a NAFTA deal could be struck by Friday's deadline.
The pan-European STOXX 600 ended the session down 0.3 percent, while Germany's DAX, which is sensitive to China due to its prominence as a German export market, dropped 0.5 percent.
Chinese stocks fell after a Reuters poll showed activity in the factory sector was likely to have slowed for the third straight month in August amid uncertainty over an escalating trade war with the United States.
In Europe, trade-sensitive mining stocks tumbled 0.8 percent.
"It's a balancing act with on the one hand relatively positive momentum behind NAFTA, but when the focus turns to China and trade war it doesn't seem like an end is in sight because any escalation plays to (President Donald) Trump's rhetoric of how he's protecting U.S. prosperity and jobs," said Gary Waite, portfolio manager at Walker Crips Investment Management.
Though autos were also off earlier in the session, a concessionary tone from European Trade commissioner Cecilia Malmstrom on car tariffs helped lift the sector, which closed flat.
Earnings reports caused some sharp moves in individual stocks.
Shares in Europe's largest property company Unibail-Rodamco-Westfield fell 4.3 percent even though the company reported a boost to profits from its acquisition of Australian shopping centre giant Westfield.
Traders said a Morgan Stanley note weighed on the stock after analysts at the U.S. bank downgraded their view on the European property industry to "in-line" from "attractive".
"For almost every property stock in Europe we expect a lower total return profile compared to what it has been delivering," Morgan Stanley analysts wrote.
They also said rising inflation and bond yields would increase differentiation in the sector and leverage would become more of a focus.
UK commercial property firm Intu fell 3.4 percent after Morgan Stanley cut the stock to underweight from equal-weight, and peer Hammerson fell 5 percent. Klepierre lost 3.3 percent after a Morgan Stanley downgrade.
Real estate was one of Europe's worst-performing sectors, down 1.2 percent.
Shares in Swedish radiation therapy gear maker Elekta fell 10.5 percent after it reported an unexpected drop in first-quarter operating profit.
Bouygues was a rare gainer, up 4.4 percent after the French conglomerate stuck to its full year outlook for rising profitability as its telecoms division improved.
The prospect of Bouygues Telecom gaining market share sent shares in rival Iliad, a telecoms disrupter offering cut-price contracts, tumbling more than 7 percent.
Bringing up the rear was Swiss asset manager GAM which sank a further 10.8 percent, hitting its lowest in more than nine years and taking its year-to-date losses to nearly 54 percent.
GAM shares have sold off sharply since the firm suspended a top director and suspended, then liquidated, some bond funds.
Overall in Europe, escalating trade disputes have driven cyclical mining and autos sectors down this year while healthcare and technology take the lead.
With the second-quarter earnings season drawing to a close, companies in the MSCI Europe index have delivered 10.9 percent year-on-year earnings growth in euro terms.
Reporting by Helen Reid; Editing by Alison Williams and Susan Fenton