UPDATE 1-Carrefour plunge rattles retail stocks as Europe extends gains

* STOXX 600 up 0.3 pct

* Shares set for 3rd straight month of losses

* Carrefour sinks 12 pct after profit warning

* Miners boost index levels

* FX headwinds dampen Pernod Ricard's results (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets)

LONDON, Aug 31 (Reuters) - Europe's shares extended their relief bounce on Thursday but were unlikely to avoid a third straight month of losses as they entered the last trading day of an unusually turbulent August, and a profit warning from Carrefour sank the retail sector.

The pan-European STOXX 600 gained 0.5 percent while euro zone stocks and blue-chips rose 0.6 percent, boosted by strong gains from miners and construction stocks, while the retail sector dropped 1.3 percent.

Carrefour shares fell 14 percent, set for their worst daily dive in 20 years, after the French supermarket chain warned 2017 profit could fall by 12 percent and cut its sales growth target.

It reported weaker than expected first-half earnings as intense competition in the retail sector weighed on margins.

"Although Carrefour's weak first-half results are partly related to some external or non-recurring factors (integration of Eroski stores in Spain, change in credit regulation in Brazil), they also illustrate the group's structural challenges," said Barclays analysts.

French peer Casino also fell more than 5 percent as investors saw similar pressures hitting it. Analysts at Jefferies said Carrefour's results forced a re-evaluation of their investment thesis.

The retail index has been one of the worst-performing in Europe this year as competition and structural pressures mount.

"It's been a tough time for the sector, with the more macro theme that Amazon is slowly eating everyone's lunch, though that's not the case in Europe to the same extent as the U.S.," said Paul Harper, equity strategist at DNB Bank.

"Another problem is that the retail sector is relatively highly priced, so there's not really much room for disappointment," he added.

Pernod Ricard shares slipped 4.1 percent after the world's second biggest spirits group said currency exchange would be a bigger weight on earnings than previously expected.

Meanwhile, Antofagasta, Anglo American and Glencore, up 2.4 to 4.2 percent, helped lift the index as copper prices rose on stronger Chinese demand.

Chipmakers AMS and Dialog Semiconductor rose 3.2 to 3.7 percent as the suppliers to smartphone maker Apple benefited from increased investor enthusiasm ahead of Apple's next iPhone release, a trader said.

Though banking stocks helped stoke gains on Thursday, they were headed for their worst monthly losses since June last year when Britain's vote to exit the EU roiled markets.

The STOXX 600 was set to close in the red for a third month.

While a global consensus has formed this year around stronger prospects for European equities, the regions main benchmarks have slipped in the summer as company earnings were measured up against lofty expectations and a surging euro reined stocks back.

"You can explain a significant chunk of the dip by the currency," said Paul Harper. "Consensus earnings for the MSCI Europe peaked in mid-May and estimates started lowering in the second quarter as analysts had to mark to market their currency assumptions."

(Reporting by Helen Reid, Editing by Kit Rees)