UPDATE 2-European shares slide to six-month low as recession fears rise

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* Germany economy shrinks in Q2
* Inversion in U.S. yields signals upcoming recession
* Tech stocks lose 3%, autos follow
* Bank sector at over 3-year low

(Updates with closing prices)
By Susan Mathew and Shreyashi Sanyal
Aug 14 (Reuters) - European stocks tumbled to a six-month
low on Wednesday, as an inversion in the U.S. yield curve
following bleak data out of major economies including Germany
and China pointed to a looming recession.
Slumping exports sent Germany's economy into reverse in the
second quarter, while Chinese industrial output growth cooled to
a more than 17-year low in July, underscoring the impact of a
bruising U.S.-China trade war on global growth.
Industrial data from the euro zone in June also had a poor
showing. "A lot investors may look at this morning's (yield)
inversion and consider it an exit sign," said Mike Loewengart,
vice president of investment strategy at E*TRADE Financial Corp.
The benchmark pan-European STOXX 600 .STOXX index closed
down 1.7%, having touched its lowest since Feb. 15, with indexes
in Germany GDAXI , France .FCHI , and political crisis riddled
Italy .FTMIB falling more than 2%.
Yields on two-year treasury notes rose above the 10-year
yield for the first time since 2007, a metric widely viewed as a
classic recession signal. That saw government borrowing costs in
Germany fell to record lows. US/ GVD/EUR
The downbeat mood in markets came after a rare day of relief
after Washington delayed tariffs on certain Chinese goods.
"Its reasonably evident by Germany's GDP contraction and the
dreadful Eurozone IP data that the U.S.-China tariff war is
hurting Germany's export-skewed manufacturing sector, which is
now bringing forward a real debate on fiscal stimulus in
Germany," wrote Stephen Innes, managing partner at VM Markets.
"But on a positive note, embarking on an aggressive fiscal
program while having the markets paying you to do so, given
negative-yielding bonds, it might not but such a bad thing at
all," Innes added.
All sectors were well in the red, with trade-sensitive
technology .SX8P slumping 3%. The Frankfurt-dominated auto
index .SXAP followed with a 2.8% drop, while falling yields
took banks .SX7P to a more than three-year low.
Stalled growth across Europe has been led by a slowdown in
the eurozone's largest economy, Germany, while the fallout from
Washington's trade war with China, Brexit uncertainty, and
Italy's political woes have also plagued the trading bloc.
The pan-regional index has lost more than 5% so far this
month, on course to match a 5.7% tumble in May which was its
biggest decline in more than three years.
Limiting the index's losses were gains in some consumer
staples, healthcare and utility stocks, as investors turned to
defensive plays.
Balfour Beatty BALF.L topped the STOXX 600, up 9.3% after
the British infrastructure company reported higher first-half
underlying pretax profit and increased its annual cash forecast.