MILAN, May 23 (Reuters) - Shares in European luxury goods makers fell sharply on Tuesday as investors took profit after the sector's stellar run this year amid concerns over weakening demand in the United States.
The STOXX Europe Luxury 10 fell 4.3% by 1430 GMT, putting the index on track for its biggest one-day drop since March 2022. The broader European market was down 0.5%
LVMH, Europe's most valuable company, fell 4.8%, having gained more than 20% so far this year. Peers Hermes and Kering fell 7.3% and 2.9% respectively.
Deutsche Bank said it was time for investors to be "more selective" on luxury stocks, saying concerns over softening U.S. growth were growing and despite robust China momentum and a resilient European market.
"The luxury sector remains a crowded long for many investors, with the sector's premium to the market at historically high levels... looking ahead we expect performance to be driven more by earnings momentum," it said.
Angelo Media, head of equities at Banor SIM, said the decline in luxury stocks lacked a clear catalyst and said it could be short-lived. Traders said there were signs of investors rotating into beaten-down sectors like real estate.
The STOXX Europe Luxury 10, which tracks top luxury goods makers including LVMH, is up around 22% year to date, in a rally that has been key for positive returns across broader European equity benchmarks in 2024.
Last week, Burberry reported stronger-than-expected quarterly sales growth driven by a rebound in China but continued weakness in the United States disappointed investors. (Reporting by Danilo Masoni, editing by Alun John and William Maclean)