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German data props up European shares after two-day sell-off

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* Main markets steadier but still slightly lower

* Two-day fall since Friday was biggest in 3 yrs

* Deutsche Post ups forecast, Oerlikon cuts guidance

* German industry orders show recovery in June

Aug 6 (Reuters) - European shares were marginally lower on Tuesday, steadying slightly after posting their biggest two-day drop in over 3 years, as upbeat German data soothed some of the nerves around the past week’s escalation of U.S.-China trade tensions.

By 0714 GMT, the pan-European benchmark stocks index STOXX 600 was down just 0.1% with Britain’s commodity-heavy FTSE 100 underperforming .

Washington on Monday formally tagged China a currency manipulator for the first time since 1994, responding to Beijing’s allowing of the yuan to weaken past 7 per dollar for the first time in a decade.

Although the yuan steadied on Tuesday after a 2.3% slump in the past three days, analysts saw China’s decision as a signal that it will not back down and that a trade war which is already affecting global growth will only worsen from here.

Against that, however, was data showing German industrial orders were up 2.5% in June from the previous month, the biggest jump since August 2017. Germany’s DAX gained 0.3% in response and the German-dominated auto sector led gains amongst sub-sector indexes.

Earnings in the region were mixed with shares of Deutsche Post rising nearly 3% after the German post and logistics group affirmed its guidance for the second half of 2019 and 2020. Switzerland’s OC Oerlikon fell 1.5% after the industrial group cut its 2019 guidance.

In M&A, shares of Germany’s Metro slumped 8% after Czech businessman Daniel Kretinsky’s investment vehicle confirmed it would not raise its 5.8 billion euro bid for the German retailer and wholesaler. (Reporting by Agamoni Ghosh in Bengaluru)