UPDATE 1-European shares fall as EU summit dampens mood

* STOXX 600down 0.4 pct, DAX down 0.6 pct

* Trade worries weigh on tech stocks

* Stronger dollar boosts consumer staples (Updates prices, adds details, quotes)

LONDON, June 28 (Reuters) - Trade tensions and political concerns again weighed on European shares on Thursday as investors positioned for a potentially divisive European Union summit.

Having clawed back some ground on Wednesday, the pan-European STOXX 600 and Germany's trade-sensitive DAX were down 0.4 and 0.6 percent by 0850 GMT, with technology and financial shares the biggest drags.

Tech stocks were the worst performers, falling 1.3 percent as concerns over tariffs spread to a sector thus far considered relatively resilient to trade disruptions.

Chipmakers STMicro, Infineon and ASML were among the biggest laggards, while Nokia and Micro Focus also fell.

Asian tech stocks had led a selloff overnight after threats from U.S. President Trump's threats to curb Chinese investment in U.S. tech firms.

High dividend-paying consumer staples stocks including Nestle and Unilever, considered safer in times of market stress, made gains.

A strong dollar was also a boost for the big dollar-earning multinationals.

H&M shares fell 3.4 percent at the open after posting earnings, but then recovered to trade up 1.5 percent.

The world's second-biggest fashion retailer reported a slightly bigger fall than expected in second-quarter pretax profit and flagged higher markdown levels in the third quarter after inventories grew again.

"Gross margin comments, higher inventory and slower growth are disappointing," UBS analysts noted.

But the shares recovered after CEO Karl-Johan Persson struck an optimistic tone about the second half. Large short positions in the stock mean it can snap back rapidly on any positive news.

The overall market mood was cautious ahead of the summit, at which differences over immigration and Brexit could be laid bare.

"Progress in deepening Euro area risk-sharing and risk reduction mechanisms to make the single currency framework more resilient continues, but the pace is slow," said Goldman Sachs economists, adding they did not expect a significant breakthrough on euro area governance from the summit.

"While those initiatives remain incomplete, the euro area remains more vulnerable to economic slowdown and financial disruption than other jurisdictions."

Investors have been pulling billions out of European equities in recent weeks and piling into U.S. stocks, as a slower pace of euro area economic growth and political risk in Italy persuaded them to seek opportunities elsewhere.

Lundbeck fell 4 percent after ABG Sundal Collier reduced the stock to "hold" from "buy".

Shares in satellite service provider SES rose 3 percent, extending Wednesday's gains after hedge fund Kerrisdale Capital disclosed long positions in it and Intelsat. (Reporting by Helen Reid, Editing by Kit Rees and John Stonestreet)