* Rally in Italian bank stocks starts to fade
* FTSEurofirst down nearly 10 pct this year
By Sudip Kar-Gupta
LONDON, April 12 (Reuters) - European shares fell on Tuesday, with luxury good stocks among the worst performers after France's LVMH posted first quarter sales below forecasts.
The pan-European FTSEurofirst 300 index and the euro zone's blue-chip Euro STOXX 50 index were both down 0.4 percent.
LVMH fell 3.4 percent after its business update, dragging down the shares of its rivals, with Burberry down 2.1 percent and Kering down 2 percent.
An early rally in Italian bank stocks faded as some investors expressed scepticism over plans by Italian financial institutions for a 5 billion euro ($5.7 billion) fund to shore up the country's weaker banks.
"LVMH's numbers were not that good, and the problem with the Italian bank fund is that it is not big enough and it risks compromising the banks that are already in a much better shape," said Francois Savary, chief investment officer at Geneva-based investment and consultancy firm Prime Partners.
The FTSEurofirst has fallen nearly 10 percent since the start of 2016 as concerns about a China-led global economic slowdown weigh on world stock markets.
But strategists at HSBC kept an "overweight" position on continental European equities.
"We continue to argue that Europe offers the best earnings story globally, although it has been disappointing so far, with the market being hurt by global growth concerns. We see a robust business cycle, policy support, and investor under-ownership," they wrote in a note.
Today's European research round-up
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editing by John Stonestreet