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* UK's stubborn inflation fails to fall, ahead of BoE

* Real estate stocks drop against higher bonds

* European autos up as data shows car sales rise in May

June 21 (Reuters) - European shares edged lower on Wednesday after the real estate sector led declines against rising euro zone bond yields, while data affirming stubborn inflation in Britain sent London stocks lower.

The continent-wide STOXX 600 index dipped 0.1%. The exporter-heavy FTSE 100 index fell 0.1%, tracking a jump in the pound following the UK inflation data.

British consumer price index defied expectations of a slowdown and held at 8.7% in May. The data comes a day before the Bank of England's policy meeting, where it is forecast to raise interest rates for a thirteenth time in a row.

The reading also served as a stark reminder that the fight against inflation by major central banks is not over yet, sending Germany's two-year government bond yield, the most sensitive to rate expectations, to its highest since March 10.

"Inflation had been expected to fall – at least a bit – but it hasn't obliged, remaining stubbornly sticky and cementing the prospect of a rate rise tomorrow," said Danni Hewson, head of financial analysis at AJ Bell.

The report has also raised the expectation that BoE's hike will be higher than previously anticipated, Hewson added.

Investors also await U.S. Federal Reserve Chair Jerome Powell's two-day testimony before lawmakers, where he will likely be questioned on whether rates will rise again in July and peak in a 5.5%-5.75% range as projected.

Real estate stocks slid 2.2%, with shares in Kojamo sliding 3.9% after Barclays double-downgraded the Finnish residential real estate company's stock.

Shares of European post & logistics companies slid after U.S. rival FedEx reported lower quarterly profits on Tuesday.

Deutsche Post, PostNL and Belgian postal operator BPost dropped between 0.5% and 2%.

European autos rose 0.7%, among top sectoral gainers, after data from the region's carmaker association showed new car registrations increased in May.

The STOXX 600 index is on track for gains of barely 1.5% in June, losing some momentum from the first quarter of the year amid a high-interest rate environment, investor preference shifting away from value-oriented stocks and lacklustre China recovery.

It is now set to underperform the U.S. benchmark S&P 500 index, which is up nearly 5% for the month so far.

A survey showed a slowdown in both the Chinese and global economies is the biggest issue affecting European firms in China, beating political tensions with the United States and decoupling. (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sohini Goswami and Eileen Soreng)