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UPDATE 1-European shares dragged by trade rhetoric

Medha Singh

* Food delivery firms hit as Amazon backs Deliveroo in funding

* Auto sector set for fourth straight week of losses

* Italy's FTMIB set for smallest weekly rise among country indexes (Adds details, quote; updates prices)

May 17 (Reuters) - European shares dropped on Friday after three days of gains, as Beijing ratcheted up its war of words with Washington over trade, weighing on risk appetite.

The pan-European STOXX 600 index was down 0.6% by 0844 GMT, though it was still looking at its best weekly performance since in 1-1/2 months.

The Chinese Communist Party's People's Daily used a front page commentary to say the trade war would never bring the country down, after telecoms equipment giant Huawei Technologies Co Ltd was put on a U.S. blacklist.

The escalating trade war, which threatens to hamper global growth, has knocked as much as 4.6% off the pan-regional index in the last two weeks. Traders have pointed to a drop in volumes as a sign investors aren't convinced by this week's rally.

Among country indexes, Germany's exporter-heavy DAX fell the most. Auto stocks, which saw a major boost on Wednesday on hopes of a U.S. tariff reprieve, led losses, down 1.6%, with BMW shedding 5.8% as its shares traded ex-dividend.

UBS analysts cautioned against reading too positively into the auto tariff delay in a note, saying the development represents a "continuation of the U.S. carrot-and-stick approach" to ongoing negotiations, while the news on Huawei ban shows the "wider scope of the U.S.-China dispute".

Delivery food companies tumbled after Britain's Deliveroo, which is unlisted, secured funding from Amazon.com Inc.

Just Eat tanked 6.9%, making it the biggest faller on the FTSE 100, while Takeaway.com and Delivery Hero lost 4% and 3% percent respectively.

European share advances on Thursday were supported by better-than-expected U.S. economic data and upbeat earnings from Walmart and Cisco.

Investors will on Friday turn to euro zone CPI data for April, due at 0900 GMT, for further clues to the health of the region's economy after powerhouse Germany returned to growth in the first quarter of 2019.

Swiss luxury goods maker Richemont reported weak profitability in its watch business and online distributors in its past financial year, sending its shares down 1%.

In a bright spot, Britain's EasyJet rose xx% after the budget carrier said it would meet expectations in 2019 despite a worse trading environment.

(Reporting by Medha Singh and Agamoni Ghosh in Bengaluru; editing by John Stonestreet and Hugh Lawson)