(Corrects this August 30 story to fix photo caption error. No change to headline or text.)

By Lucia Mutikani

WASHINGTON (Reuters) - U.S. consumer spending increased solidly in July as households bought a range of goods and services, which could further allay financial market fears of a recession, but the strong pace of consumption is unlikely to be sustained amid tepid income gains.

The report from the Commerce Department on Friday added to July trade and inventory data in suggesting that while the economy was slowing, it was not losing altitude rapidly for now. But risks to the longest economic expansion in history are mounting, mostly from a year-long trade war between the United States and China.

The trade fight between the two economic giants has spooked financial markets and caused an inversion of the U.S. yield curve, which has stoked fears that the economic expansion now in its 11th year is in danger of being derailed by a recession.

"Even with elevated policy uncertainty and financial market turbulence, the U.S. consumer continues to display great vitality, emboldened by a large savings buffer," said Lydia Boussour, senior U.S. economist at Oxford Economics in New York.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.6% last month after an unrevised 0.3% gain in June, the government said.

Economists polled by Reuters had forecast consumer spending advancing 0.5% last month. Consumer spending is being driven by a strong labor market, which is marked by the lowest unemployment rate in nearly 50 years, and better job security.

But with Washington due to slap additional tariffs on Chinese goods on Sept. 1 and in December, there are concerns that consumer spending could take a hit.

A survey from the University of Michigan on Friday showed its consumer sentiment index in August dropping by the most since December 2012, amid nervousness about the trade tensions.

Earlier this week, a survey from the Conference Board, which focuses heavily on the labor market, showed a mild drop in consumer sentiment in August. The stock market has a bigger weighting in the University of Michigan consumer sentiment survey.

"The link between sentiment and spending is not especially tight, but the recent decline in consumer sentiment could be a sign that the spending data will soften soon," said Daniel Silver, an economist at JPMorgan in New York.

The U.S.-China trade conflict has weighed heavily on manufacturing and business investment, which contracted in the second quarter. That, together with slowing global growth as well as persistently low domestic inflation, will likely see the Federal Reserve cutting interest rates again next month.