UPDATE 2-European stocks drop as China ups stakes in trade war with U.S.

* China to impose higher tariffs on revised target list
* Vodafone falls on report of dividend cut plans
* Utilities stocks gain, investors favor defensive bets

(Updates to close, adds strategist's quote)
By Aaron Saldanha
May 13 (Reuters) - European stocks continued their decline
on Monday, on the heels of this year's biggest weekly loss, as
an escalation in the U.S.-China trade war battered sentiment and
prompted investors to shift into safer bets.
China said it would impose higher tariffs on most U.S.
imports on a revised $60 billion target list, chilling risk
appetite world over as it hit back at a tariff hike by
Washington which came into force on Friday. MKTS/GLOB
The pan-European STOXX 600 index .STOXX dropped 1.2%, with
all sub-sectors apart from utilities declining.
Germany's trade-sensitive DAX .GDAXI dropped 1.5%, while
French shares .FCHI fell 1.2%. London-traded stocks .FTSE
fell to a two month closing low, down 0.6%. .L
Graham Secker, European equity strategist at Morgan Stanley,
said the near-term worsening in the risk-reward outlook for
equity markets, amid rising trade tensions, may drive more
traditional defensive sectors to outperform.
Utilities stocks .SX6P - oft-considered a defensive bet -
rose 0.2%. Centrica Plc CNA.L rose 3% as Britain's top energy
supplier maintained its full-year outlook. Oil and gas stocks .SXEP dipped 0.1%, saved from a steeper
fall by Brent crude futures LCOc1 rising following attacks on
vessels off the United Arab Emirates' coast. O/R
Stocks of tariff-exposed auto-makers and their suppliers
.SXAP dived 2.7%, as all stocks on the sector index fell.
The slide on the day took the sector index from
outperforming the STOXX 600 in the year to date to
underperforming the broad benchmark. While the STOXX 600 has
added 10.3% in 2019, auto stocks are now up 9.7%.
The telecommunications index .SXKP slid 2.2% as all stocks
on it fell. Vodafone Group VOD.L led the decliners with a 5.2%
drop.
Berenberg cuts its price target on the London-listed firm,
which was reportedly going to cut its dividend to pay for
auctions for mobile phone airwaves in Germany and
Italy.
Chemicals firms .SX4P slid 1.3%, with polymer maker
Victrex Plc VCTX.L diving 7.2% after warning annual growth
could stall following a much weaker first half due to fewer
automotive and consumer electronics contracts. Banks .SX7P slid 1.6%, with Deutsche Bank DBKGn.DE and
UBS UBSG.S falling 2% and 2.1%, respectively.
Talks between the German banking giant and the Swiss lender
to tie up their asset management businesses have stalled,
sources told Reuters, mainly over which bank would control the
combined entity.
DWS DWSG.DE , Deutsche's asset management unit, fell 3.3%
to its lowest closing level in a month and a half.
Thyssenkrupp TKAG.DE shed 8.7 percent. Short-sellers
scrambling to unwind their bearish bets had sparked a record
gain in the German firm's stock on Friday, when it said it would
embark on a fresh restructuring and list its elevators business.