Mercedes drops after it cuts outlook, flags China weakness
UK39;s Burberry slips after Jefferies downgrade
Luxury goods sector drops over 2
STOXX 600 down 0.4

Sept 20 Reuters European shares slipped on Friday after a rally in the previous session spurred by the U.S. Federal Reserve39;s outsized interest rate cut, while shares of Mercedes were set for their worst day in 15 months after the automaker cut its core profit outlook.

The panEuropean STOXX 600 index fell 0.4 to 519.76 points as of 0805 GMT but was on track for a second straight week of gains.

All major European markets were trading lower, except Spain39;s that edged up 0.1.

Automobile shares led sectoral losses with a 2.9 fall, hurt by a 7.6 drop in MercedesBenz after the carmaker cut its fullyear profit margin for the second time in less than two months, as overall sales volume fell in China.

Mercedes also dragged the German benchmark index, which declined 0.8. German producer prices fell less than expected in August, decreasing by 0.8 on the year versus expectations of a 1 decline.

Europe39;s luxury goods sector slid more than 2 after Jefferies said it does not see appreciable improvement for the luxury market in the second half of the year.

Technology shares were down 1.1, while personal goods shares dropped 1.5.

Britain39;s FTSE 100 declined 0.5, after a survey showed consumer confidence dropped sharply to a sixmonth low.

Consumers were less confident about their own personal financial position…