By Amruta Khandekar, Shreyashi Sanyal and Shristi Achar A
(Reuters) -European shares fell on Monday as Richemont led a slide among luxury firms on weaker-than-expected organic sales growth and as lacklustre economic growth in China raised concerns about demand from the world's second-biggest economy.
The pan-European STOXX 600 index closed 0.6% lower, with luxury giants at the forefront of the selling pressure.
Shares of the world's second-biggest luxury firm, Richemont, dropped 10.4% in their sharpest one-day percentage fall in over a year after weakness in the Americas weighed on first-quarter organic sales growth.
Other luxury giants, including LVMH, Europe's most valuable company, Hermes, Salvatore Ferragamo and Kering (EPA:PRTP) shed between 1% and 4.2%.
The personal and household goods index, housing luxury firms, was the biggest sectoral loser, down 2.6%.
The Swiss Market index and luxury-heavy French stocks both fell over 1% to lead regional declines.
Further hurting sentiment was data that signalled China's economy grew at a frail pace in the second quarter on weaker demand, raising pressure on policymakers to deliver more stimulus.
"The Chinese market is not growing as fast as everyone expected and we know that this is a very big catalyst European equities have been riding on since the beginning of the year," said Anthi Tsouvali, multi-asset strategist at State Street (NYSE:STT) Global Markets.
The mining sector was the second-biggest decliner, down 2.1%, as concerns about demand from top consumer China weighed on metal prices. [MET/L].
Belgium's Argenx SE jumped 31.0% to the top of the STOXX 600 as its muscle-weakening disease drug met its main goal.
Brussels stocks jumped 3.4%, outperforming the rest of Europe and recording their best day since early March 2022.
The benchmark STOXX 600 index logged its biggest weekly percentage gain since the end of March in the previous week on hopes the Federal Reserve could wind up its rate hike cycle soon after July, given cooling U.S. inflation.
However, analysts have cautioned that other major central banks, particularly the Bank of England, have further to go in terms of tightening.
Earnings are also a big focus, with heavyweights such as Tesla (NASDAQ:TSLA) expected to issue results this week, after big U.S. banks kicked off the second-quarter results season on Friday.
Shares in Banco BPM rose 2.0% after the Italian bank entered a payments deal with private equity fund FSI.
The move helped the banks sub-index gain 0.5%.