PARIS: European shares fell on Tuesday, knocked down by losses in luxury majors and a weak update from Swiss wealth manager Julius Baer, while investors were also vigilant of economic data from the region and the US debt ceiling deadlock.

The pan-European STOXX 600 index closed 0.6% lower, logging its steepest one-day percentage fall in three weeks.

The STOXX Europe Luxury 10 tanked 4.3%, its steepest single-day fall since mid-December, as investors took profit after a stellar run for the sector amid signs of weakening demand in United States.

Deutsche Bank said it was time for investors to be “more selective” on luxury stocks, citing signs of softening US growth and despite robust China momentum and a resilient European market.

LVMH, Europe’s most valuable company, fell 5.0% having gained nearly 23% so far this year. Peers Hermes and Kering dropped 6.5% and 3.0%, respectively.

“You may expect the weaker economic outlook in the US, Europe and China to have an effect on consumer spending on these (luxury) goods, with markets moving towards more conservative portfolio building,” said Daniela Hathorn, senior market analyst at Capital.com.

Meanwhile, Republicans in the US House of Representatives said they were making little progress in negotiations with the White House over raising the debt ceiling, while facing a default risk in as soon as nine days.

Further, data showed euro zone business growth remained resilient in May, but slowed slightly more than expected as the bloc’s dominant services industry lost a little of its shine and the downturn in the manufacturing sector deepened.

The STOXX 600 ground to a more than one-year high last week and the German DAX hit records as upbeat earnings and signs of a resilient euro zone economy offset concerns of a potential US recession and debt deal standoff in Washington.