SHANGHAI, June 12 (Reuters) - China stocks fell on Wednesday after the previous session's rally, as weak factory inflation data and prospects of an escalation in the Sino-U.S. trade war curbed risk appetite.
* The blue-chip CSI300 index fell 0.8%, to 3,691.10 points, while the Shanghai Composite Index lost 0.6%, to 2,909.38 points. * China's factory gate inflation slowed amid sluggish commodity demand and faltering manufacturing activity, reinforcing worries about slowing economic growth.
* In a sign that trade tensions could intensify, U.S. President Donald Trump on Tuesday defended the use of tariffs as part of his trade strategy while China vowed a tough response if the United States insists on escalating trade tensions.
* Shares of real estate companies fell on worries about the sector's health, after the city of Enshi made moves to stabilise property prices.
* Bucking weakness in the broader market, rare earth stocks jumped after news that China launched a survey of rare earth resources in seven regions on Monday, amid speculation that Beijing may curb exports of the materials to the United States.
* Chengdu Galaxy Magnets Co Ltd and China Northern Rare Earth Group High-Tech Co led the gains.