* FTSEurofirst 300 down 0.2 percent, extends sell-off
* Luxury stocks drop on Burberry, Mulberry warnings
* French telecoms rally as Iliad drops T-Mobile bid
By Blaise Robinson
PARIS, Oct 14 (Reuters) - European stocks fell early on Tuesday, losing ground for the seventh time in 10 sessions and tracking steep losses on Wall Street as investors fret about the strength of the global economy.
British luxury brand Burberry was among the top losers in Europe, down 4.4 percent after warning that market conditions were becoming more difficult, partly offsetting reduced currency headwinds.
The warning hurt shares of other luxury goods makers, with Louis Vuitton owner LVMH down 1.3 percent.
Smaller rival Mulberry tumbled 17 percent after saying full-year pre-tax profit would be significantly below expectations after a slump in first-half trading added to the disruption of a product overhaul.
Bucking the trend, shares in Iliad surged 13 percent in brisk volumes after the French low-cost telecoms operator dropped its bid to buy T-Mobile U.S. Inc.
Backed by billionaire founder Xavier Niel, Iliad had made an initial bid worth $15 billion and then raised it further, but was rebuffed by T-Mobile's parent company, Deutsche Telekom . Shares in the German telecom group were down 0.5 percent.
The news rekindled speculation about consolidation in the French telecom sector, boosting shares of Bouygues and Orange by 5.5 percent and 1.9 percent respectively.
"It's lifting the whole sector in France, with fresh market talk about the future of Bouygues," Barclays France director Franklin Pichard said.
Daimler meanwhile leapt 3.3 percent, the biggest gainer among European blue-chips, after the German car and truck maker said it was reviewing its guidance for 2014 industrial free cash flow, a major factor when it comes to funding dividend payments, after the figure jumped in the third quarter.
At 0817 GMT, the FTSEurofirst 300 index of top European shares was down 0.2 percent at 1,291.27 points.
The index has lost about 8 percent since mid-September, mirroring a sharp pull-back in equity markets worldwide on jitters about the outlook for global growth and uncertainty over the timing of an expected first U.S. interest rate hike.
Investors were braced for the monthly ZEW survey of German economic sentiment following a recent deterioration in data from Europe's biggest economy. The ZEW, due at 0900 GMT, is seen falling to 1.00 from 6.9 a month ago.
"We recommend selling in the short term," Aurel BGC analyst Gerard Sagnier said. "European indexes have pierced below long-term support levels, and downward trends are shaping up. It's too early to buy the dips."
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
Editing by Catherine Evans