* FTSEurofirst 300 down 1 pct, Euro STOXX 50 down 1.2 pct
* FTSEurofirst breaks below 50-day moving average
* Comments on China from Burberry CEO weigh on luxury stocks
By Blaise Robinson
PARIS, Oct 7 (Reuters) - European stocks dropped in earlytrade on Monday, with one benchmark index hitting a four-weeklow, as the lack of progress in resolving Washington's budgetstandoff kept investors on edge.
Shares in luxury goods makers were among the heaviestfallers after Burberry's CEO was quoted in French dailyLes Echos as saying that the slowdown in luxury goods sales inChina may constitute a new market trend.
Burberry was down 2 percent, while France's LVMH was down 1.8 percent, and Swiss watch maker Richemont lost 1.5 percent.
At 0729 GMT, the FTSEurofirst 300 index of top European shares was down 1 percent at 1,231.25 points, a levelnot seen since Sept. 10. The benchmark index broke below its50-day moving average of 1,232.47, which had been an importantsupport line.
The euro zone's blue-chip Euro STOXX 50 indexwas down 1.2 percent, at 2,892.78 points.
U.S. Democrats and Republicans came no closer on Sunday to abudget agreement that would end a government shutdown, let alonereaching a deal on the U.S. borrowing limit by Oct. 17 to avoidan unprecedented default.
Republican House Speaker John Boehner said he would notraise the debt ceiling without a "serious conversation" aboutwhat is driving the debt. Democrats said it was irresponsibleand reckless to raise the possibility of a default.
"The strong optimism seen just a week ago is eroding, andinvestors are getting nervous, with all eyes on Washington, atleast until Alcoa's earnings," said Guillaume Dumans, co-head ofresearch firm 2Bremans.
Around Europe, UK's FTSE 100 index was down 0.9percent, Germany's DAX index down 1.2 percent andFrance's CAC 40 down 1.4 percent.
A number of traders in the market, however, still expectWashington to reach a deal, which would spark a recovery rallyin the market.
"We're going to wobble our way down until about Thursday andthen there's going to be a solution and there will be amelt-up," said Justin Haque, a broker at Hobart Capital Markets.
Bucking the trend, shares in Banca Monte dei Paschi di Siena rose 4 percent after the Italian lender said it wouldhold a board meeting on Monday to approve a new restructuringplan aimed at gaining a green light from European authoritiesfor a state bailout it was granted earlier this year.
- Europe News
- Euro STOXX 50