European shares lower on China falls, Reckitt marks worst day in 18 years

European stocks lost ground on Tuesday after falls in Chinese shares and Reckitt Benckiser's warning on margins ahead of earnings updates from big fashion retailers later in the day.

The pan-European STOXX index fell 0.5% in its second straight session of losses.

Worries about tighter regulation of China's heavyweight technology sector fuelled a selloff in global markets this week despite optimism about the ongoing US and European earnings season.

Dutch company Prosus, which has a stake in Chinese technology giant Tencent, slumped 7.2% to the lowest since May 2020, after Chinese stocks sank to multi-month lows.

Lysol-maker Reckitt tumbled 8.4% and logged its worst day since February 2003 as it joined other top consumer goods companies with a warning its margins will be squeezed this year by higher costs.

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"For years, the market has assumed that big consumer goods companies had such strong brands that it was easy to pass on any extra costs to the customer in the form of higher prices," said Danni Hewson, financial analyst at AJ Bell. "Unilever recently showed that wasn't quite the case, and now Reckitt has also poured cold water on that theory."

Most European sector indexes fell, with technology stocks leading declines as Logitech tumbled 9.9% after the Swiss maker of computer equipment maintained its full-year targets, despite reporting better-than-expected quarterly results.

Investors are awaiting earnings from US technology companies later in the day, as well as the Federal Reserve's decision on interest rates and economic outlook at the end of its two-day policy meeting on Wednesday.

In Europe, 104 companies in the STOXX 600 have reported earnings so far. Of these, 64.4% exceeded analyst estimates, as per Refinitiv IBES data. In a typical quarter, 51% beat estimates.

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LVMH edged lower even as the world's biggest luxury goods group posted higher revenue and profits, driven by surging sales of fashion lines and handbags by Dior, Fendi and Louis Vuitton.

Peers Kering and Moncler, expected to report results after markets close on Tuesday, slipped amid the broader market selloff.

French software company Dassault Systemes rose 1.3% after it raised its 2021 forecasts following strong momentum across its businesses.