UPDATE 2-European stocks end brutal August on a positive note

By Medha Singh and Agamoni Ghosh
Updated

* Real estate firms rise on watered down Berlin rent cap

* Tariff reprieve lifts markets for second day

* STOXX 600 posts best week since June (Recasts with new comment, updates to close)

By Medha Singh and Agamoni Ghosh

Aug 30 (Reuters) - European stocks scaled fresh one-month highs on Friday, wrapping up a brutal month on a positive note as investors took comfort from Chinese and U.S. willingness to return to trade talks.

The pan-European STOXX 600 index rose 0.7% to hit its highest level since Aug. 2, building on the previous day's rally after both China and the United States indicated they were discussing the next round of negotiations in September.

Tariff-sensitive commodity-linked stocks rose 2.5%, automakers 1% and technology stocks gained 0.9%.

"The trade situation is still tense but in the meantime traders are happy to buy back into the stock markets," said David Madden, analyst at CMC Markets in London,

"Although things can change very quickly, so far it looks like we are heading into September on a somewhat optimistic note in relation to U.S.-China trade talks."

The real estate sector jumped 2% and was set to post its best day since Oct 2018, as German real estate companies gained after a report said a rent freeze in Berlin could be watered down.

German real-estate firms Deutsche Wohnen, Vonovia SE and LEG Immobilien AG rose between 4% and 9%.

Britain's FTSE 100 ended the day 0.3% higher but just shy of having its worst month in four years as sterling's recovery, the U.S.-China trade spat and a sharp drop in mining stocks took its toll on the export-heavy index.

Most European indices have racked up losses this month barring Denmark, Romania and Switzerland , as an inversion in the U.S. Treasury yield curve exacerbated concerns about economic growth in the face of the U.S.-China trade war.

Italy's FTMIB, the best performing eurozone stock index in August, fell short of recording a monthly gain after the 5-Star movement unsettled its potential coalition partner Democratic Party (PD) with tough terms.

Milan shares had rallied this week on growing optimism about a new coalition government at the centre, weeks after League leader Matteo Salvini pulled support from a coalition arrangement that formed Rome's central government.

(Reporting by Medha Singh, Agamoni Ghosh and Amy Caren Daniel in Bengaluru; Additional reporting by Josephine Mason; Editing by Arun Koyyur and Edmund Blair)