UPDATE 1-Defensives drive European shares higher before U.S.-China trade talks


* European stocks edge higher

* U.S.-China trade talks set for Wednesday

* Defensive sectors lead gains

* BHP weighs on miners after full-year results (Recasts, adds quotes and detail, updates prices)

LONDON, Aug 21 (Reuters) - A bounce across defensive sectors propelled European shares higher on Tuesday, though trading was cautious before trade talks between the United States and China later in the week.

The pan-European STOXX 600 index was up 0.2 percent by 0851 GMT. Germany's DAX rose 0.5 percent and Britain's FTSE 100 was flat.

Worries over a trade dispute between Washington and Beijing have been a drag on markets, accompanied by escalating rounds of tit-for-tat tariffs.

Investors hope the talks on Wednesday will ease some of the tensions but U.S. President Donald Trump said in an interview that he does not expect much progress.

"Comments made by President Trump dampened some enthusiasm generated by the impending start of low-level trade negotiations between the U.S. and China," Fiona Cincotta, senior market analyst at City Index, said.

Sectors considered less dependent on the economic cycle led gains, however. Healthcare, utilities and consumer staples were in positive territory, suggesting that investors were cautious.

A weaker dollar also supported shares in companies that make much of their revenue overseas, such as brewer AB InBev and pharma company Novartis. A stronger oil price supported energy stocks.

European stocks are down 1.3 percent for the year, amid the worries over trade and a currency crisis in Turkey.

"Relatively muted earnings growth, weak economic momentum and heightened political risks are challenges," Richard Turnill, BlackRocks global chief investment strategist, said in a note. They have an "underweight" view on European equities.

Though the earnings season is largely over in Europe, shares in oilfield services company Wood Plc were the top STOXX gainers, up nearly 6 percent, after reporting a first-half profit towards the higher end of its forecast.

Peer Saipem gained more than 4 percent after winning contracts from Exxon Mobil.

However, shares in BHP Billiton were down 1.5 percent after its underlying profit came in below forecasts . Analysts at Jefferies said that some investors might be disappointed that BHP did not announce a buyback, and free cash flow may have peaked.

Elsewhere shares in Aggreko rose 3.8 percent after HSBC raised its rating on the temporary power provider to "buy" from "hold". (Reporting by Kit Rees, editing by Larry King and David Stamp)