European shares hit by China weakness in luxury drink sales

* FTSEurofirst 300 falls 0.2 pct, Euro STOXX 50 down 0.3 pct

* Remy Cointreau (Frankfurt: RMC.F - news) , Diageo (LSE: DGE.L - news) report weak China demand

* Euro strength knocks back SAP (NYSE: SAP - news) outlook

* Major European markets shut on Friday, Monday

By Alistair Smout

LONDON, April 17 (Reuters) - European shares edged lower on Thursday, weighed down by weakness in luxury drinks after a crackdown on gift giving in China knocked beverage company earnings, in quiet trade ahead of a public holiday.

Concerns over a strong euro also hit company earnings, confirming a poor start to the earnings season in Europe.

Remy Cointreau dropped 6.6 percent after it warned full-year operating profit would plunge as much as 40 percent. Cognac sales sank 32 percent in the fourth quarter as the Chinese government cracked down on ostentatious spending.

Weakness in Asia also affected Diageo. It fell 4.8 percent to drop to the bottom of the pan-European FTSEurofirst 300 after reporting a a 1.3 percent decline in third-quarter organic net sales on Thursday.

The maker of Johnnie Walker Scotch and Smirnoff vodka has a stake in China's Shuijingfang. The Chinese company makes baiju, a white spirit whose sales are being hammered by a government crackdown on gift-giving.

"Diageo's FY2014 Q3 trading statement clearly missed market expectations as organic sales growth was a negative 1.3 percent compared with market expectations of a 2 percent increase," analysts at Oriel Securities said in a note.

In all, food and beverage stocks fell 1.4 percent, the top sectoral faller in Europe.

German business software maker SAP fell 3.4 percent after it warned that it expected the damage done by volatile exchange rates to worsen in the second quarter as the strong euro weighs on its financial results.

Many of the factors driving the euro exchange rate to levels that have set off alarm bells at the European Central Bank are unlikely to go away on their own, part of the reason the bank has been threatening action.

"The strong euro is not helping the export markets. It would be less of an issue if we were seeing decent growth in emerging markets that was reflected in corporate numbers, but unfortunately there are major headwinds for European companies," said Manoj Ladwa, head of trading at TJM Partners.

Although it has only just started, European earnings season has been weak so far. Sixty 60 percent of companies that have reported results have missed expectations, Thomson Reuters (Frankfurt: TOC.F - news) StarMine data showed.

The FTSEurofirst 300 fell 0.2 percent to 1,320.16, retracing some of the previous session's 1.2 percent gain and remaining hemmed in recent ranges. The euro zone Euro STOXX 50 fell 0.3 percent.

The FTSEurofirst 300 had surged on Wednesday after Chinese growth came in ahead of expectations. Even though beverage stocks suffered from lower Chinese demand, some firms benefitted from growth in the world's second-largest economy.

The index's top riser was advertising agency Publicis (Paris: FR0000130577 - news) , which rose 3.1 percent after posting revenue growth on a comparable basis in the first quarter, helped by strong digital sales and an uptick in China and Europe.

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today's European research round-up

(Editing by Larry King)