UPDATE 2-European shares drop as trade jitters return

* Trump signs into law bill backing HK protesters
* China warns of 'firm counter measures'
* Trade-sensitive autos log worst day in over a week
* Virgin Money UK posts best day since IPO
* Britain's Ocado leads retail index to four-year high

(Updates to close)
By Sagarika Jaisinghani
Nov 28 (Reuters) - European shares retreated from a
four-year peak on Thursday as concerns about a U.S.-China trade
truce resurfaced after U.S. President Donald Trump signed into
law a bill supporting protesters in Hong Kong, drawing a sharp
rebuke from Beijing.
The law warns of sanctions against human rights violations
in Hong Kong amid pro-democracy protests. In response, Beijing
said it would take "firm counter measures" in what it views as
interference in an internal matter. The pan-European STOXX 600 index .STOXX fell 0.1% after
gaining for four straight sessions, as the diplomatic standoff
threatened to derail trade negotiations between the world's top
two economies.
Shares of trade-sensitive auto parts makers .SXAP led
declines on the index, shedding 0.8% in their worst day in more
than a week.
"The market is reacting in a cautiously positive way to the
fact that we don't have any details of (China's) retaliation,"
said Ken Odeluga, market analyst at City Index in London. "I
think we'll know more in the coming days and the market is
keeping its powder dry for that."
European shares tracked global stocks higher this week as
investors turned hopeful that at least a partial trade deal
would be signed by the end of the year. The next important date
in the dispute is Dec. 15, when U.S. tariffs kick in on Chinese
imports including electronics and Christmas decorations.
Investors are also closely watching economic indicators as
Europe's powerhouse - Germany - teeters on the edge of
recession, although latest figures have signalled that the
downturn could be bottoming out.
Fresh data on Thursday showed German annual inflation rose
slightly in November, but remained well below the European
Central Bank's target level for the seventh month in a row.
Traders also shrugged off a better-than-expected rebound in euro
zone economic sentiment in November. "It's pretty clear that while some of the downturning growth
may be stabilising, there's no realistic or meaningful sign just
yet that we have come to the end of the slowdown," Odeluga said.
In corporate news, Virgin Money UK Plc VMUK.L jumped 19%
in its best day since going public in 2016 as it said provisions
for the PPI mis-selling scandal were within its previous
expectations. British online grocer Ocado OCDO.L rose 3.6% after saying
it would open its first "mini" robotic warehouse by early 2021.
The stock led the wider European retail index .SXRP to a
four-year high.