UPDATE 2-European shares give up gains as banks weigh amid concerns on growth, Brexit

* London's FTSE outperforms as pound falters on Brexit woes

* European banks lower as bond yields slide

* Swedish banks hit by money laundering scandal

* Sentiment tempered by disappointing U.S. GDP numbers

* U.S.-China trade talks in focus

(Updates to closing)

By Susan Mathew

March 28 (Reuters) - European shares pared early gains to finish lower on Thursday as optimism around some progress in U.S.-China trade talks were outweighed by losses in banks amid a gloomy outlook for global economic growth and uncertainties around Brexit.

The pan-region STOXX 600 index .STOXX slipped 0.1 percent, with Frankfurt's trade-sensitive index DAX .GDAXI giving up most gains to close 0.08 percent lower, while Madrid .IBEX and Milan .FTMIB slipped more than half a percent each.

The pullback intensified after data showed that economic growth in the United States slowed more than expected in the fourth quarter - the latest addition to a slew of poor economic data from around the globe. .N

The 0.6 percent rise in London's FTSE 100 .FTSE was the most among regional indices, spurred by a weaker pound after Wednesday's indicative vote on Brexit ended in a deadlock. to persuade lawmakers to back British Prime Minister Theresa May's deal continue with a parliamentary debate scheduled for Friday amid reports that it will not be a so-called 'Meaningful Vote', making the rounds. FTSE is ahead purely because the pound is having a terrible day. But subsequently, the euro's gains against the pound are preventing the DAX and the rest of the euro zone indices from properly joining in with the rally seen in the UK," said Connor Campbell, an analyst at Spreadex.

The factors at play in the market on the day were currency index entanglements, a bit of U.S.-China trade hopes and some bad data from the U.S., Campbell said.

Trade optimism was prompted after Reuters reported that China has made proposals on issues like forced technology transfers as it works to end their trade war as the next round of talks start in Beijing. White House economic adviser Larry Kudlow said Washington could lift some tariffs. banking stocks .SX7P fell the most on the pan-region index as bond yields continued to decline, keeping alive fears of a slowing global economy. London's Prudential PLC PRU.L gave up 2.3 percent.

Swedish banks were the worst hit, as fears that a rapidly-growing money laundering scandal centered around Swedbank SWEDa.ST - the country's biggest lender - would spread to other banks. of Swedbank slid 7.8 percent, while SEB SEBa.ST and Handelsbanken SHBa.ST lost more than 6 percent, making the trio among the biggest drags on the STOXX 600.

National Grid NG.L fell 3.3 percent after BBC reported that the opposition Labour Party plans to renationalise the utility. German mobile operator 1&1 Drillisch's DRIG.DE almost 15 percent tumble on fears it could suspend dividends for 5G spectrum auction bid was the biggest on the region's benchmark index. stocks .SXAP fell as Fiat Chrysler Automobiles FCHA.MI slid 2 percent after Nissan Motor Co's 7201.T chief executive said he was unaware of discussions about its French partner Renault SA RENA.PA making a bid for the Italian company. to Fiat Chrysler's woes, Volkswagen VOWG_p.DE said it was not interested in a partnership with the company.

Losses on the STOXX 600 were limited gains in healthcare stocks as international companies, which typically gain from weakness in the pound, such as pharmaceutical giants AstraZeneca AZN.L and GlaxoSmithKline GSK.L rose more than 1.5 percent each.

German industrial gases group Linde LING.DE was among top boosts, up 1.8 percent as UBS raised its price target on the company.

Tech stocks .SX8P also staged a come back with French It services company Capgemini CAPP.PA up 3.8 percent