Europe's luxury stocks drop on China concerns
Adds more details in paragraphs 9 and 10
MILAN/PARIS, Sept 5 (Reuters) -Shares in some big European luxury goods companies fell sharply on Thursday, with traders citing growing concerns over slowing demand in the key Chinese market following the latest signs of a weakening in the world's No. 2 economy.
At 1225 GMT, a gauge of top ten European luxury stocks .STXLUXP was down more than 3%, approaching the low hit during an early August market rout. Sector heavyweight LVMH LVMH.PA was also down over 3% in Paris.
Shares in Hermes HRMS.PA and Italy's Brunello Cucinelli BCU.MI fell 6% and 5% respectively, among the top fallers on Europe's region-wide STOXX 600 .STOXX index, which was down just 0.4%.
JPMorgan this week ditched its buy rating on Chinese stocks, warning of the risk of a second tariff war after November's U.S. election and citing worries about Chinese growth.
Growth in China's services sector activity slowed in August despite the summer travel peak, prompting some firms to cut staff amid concerns about rising costs, a private-sector survey showed on Wednesday.
Analysts also highlighted a media report that said LVMH-owned Tiffany was downsizing a flagship store in Shanghai as a reason for Thursday's weakness in luxury stocks.
"Concerns about demand in China have disproportionally hit the luxury sector," said Jelena Sokolova, senior equity analyst at Morningstar.
The analyst said the scaling back of the flagship store could signal "a potential domino-effect", adding "this is a space to watch".
LVMH's beauty retailer Sephora on Aug. 21 said it was cutting its workforce in China as consumers rein in purchases of creams and make-up.
Analysts and luxury executives have warned that a downturn in luxury spending in China is unlikely to reverse this year.
Reporting by Danilo Masoni and Samuel Indyk and Mimosa Spencer; Editing by Dhara Ranasinghe and Mark Potter
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