* STOXX 600 down 0.3 pct
* Fiat Chrysler sinks as new CEO cuts outlook
* Luxury stocks rise on strong LVMH profit
* STMicro drops as in-line results fail to inspire (Recasts, adds details, closing prices)
By Danilo Masoni and Helen Reid
MILAN/LONDON, July 25 (Reuters) - Warnings from carmakers Fiat Chrysler and General Motors weighed on European shares on Wednesday as investors braced for a high-level trade meeting in Washington.
European Commission President Jean-Claude Juncker and Donald Trump were expected to focus on trade and the U.S.’s President threatened tariffs on U.S. car imports from Europe.
The pan-European STOXX 600 fell 0.3 percent as auto stocks, which rely heavily on exports for growth, declined 1.9 percent to lead sectoral losers in the region.
Greg Valliere, Chief Global Strategist at Horizon Investments, said expectations over the meeting were low.
“There are only two likely outcomes from today’s talks at the White House: either a pledge to continue negotiations, or a complete breakdown in talks,” he said.
“A third option – signs of a deal with Europe on tariffs – does not appear to be imminent, which means steep new U.S. auto tariffs are still on the table,” he added.
In European afternoon hours, the Washington Post reported that several of Trump’s senior economic advisers believe he plans to impose a 25 percent tariff on close to $200 billion of foreign-made automobiles later this year.
That further weighed on auto stocks, which had already been hammered earlier in the day by disappointing earning updates from Fiat Chrysler and General Motors, both partly due to trade tariffs.
Fiat Chrysler reported second-quarter operating profit below expectations and it cut its full-year outlook in response to a weaker performance in China.
Its shares fell 15.5 percent, it second biggest daily fall ever. Fiat’s warning came a few days after the group named its Jeep brand head Mike Manley as CEO to succeed Sergio Marchionne, who died on Wednesday after surgery complications.
German carmakers Daimler and BMW, which are heavily exposed to the U.S. market, both fell more than 2 percent.
Elsewhere, luxury stocks gained after conglomerate LVMH reported strong profits and said Chinese shoppers were still snapping up goods at its major brands including Louis Vuitton.
Its shares rose 1.8 percent, hovering near record highs, while Gucci owner Kering added 2.6 percent and Hermes gained 1.2 percent.
Tech stocks were dragged down by chipmaker STMicroelectronics, which fell 8.8 percent after reporting results in line with expectations, and slightly weaker margins.
Traders said in-line results were not good enough to drive further gains as investors expect strong growth from tech companies such as STMicro.
Deutsche Bank fell 1.4 percent after Germany’s largest bank detailed progress on its restructuring and announced a 14 percent drop in net profit in the second quarter, which was marked by weakness in its key trading business.
In encouraging results, Swiss drug ingredients maker Lonza rose 6.6 percent after upgrading its 2018 sales growth target, while French appliances company SEB jumped 9 percent after it also raised its sales growth guidance.
Telefonica Deutschland reported a narrower than expected loss, sending its shares up 8.1 percent as investors cheered the strong results.
Indivior sank 7.7 percent after the British drug company said the blow from the launch of a copycat of its opioid addiction treatment would be bigger than expected this year.
Overall second-quarter European earnings growth is expected to come in at 8.1 percent year-on-year, better than the first quarter.
“Equities continue to be supported by strong earnings which have helped to reduce multiples to normal levels,” said Abi Oladimeji, chief investment officer at Thomas Miller Investment.
So far, healthcare and technology sectors have delivered the lion’s share of positive earnings surprises, while banks have also performed better than expected after analysts revised estimates down ahead of results.
In dealmaking moves, Belgian insurer Ageas rose 3.2 percent after a report Chinese conglomerate Fosun was planning to bid for parts or the whole of the company.
Reporting by Danilo Masoni; editing by David Evans