Europe share rally pauses; luxury stocks hit by EM exposure

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

* Indexes lose steam as big resistance levels loom

* Emerging markets worries weigh on luxury goods makers

* Tensions in Ukraine keep investors on edge

By Blaise Robinson

PARIS, Feb 26 (Reuters) - European stocks retreated on Wednesday, taking a breather from their sharp three-week rally, with shares in luxury goods makers under renewed pressure due to their big exposure to emerging markets.

Credit Suisse (NYSE: CS - news) was also in the spotlight, down 2.8 percent as a U.S. Senate subcommittee alleged new misdeeds by the Swiss lender.

At 1548 GMT, the FTSEurofirst 300 index of top European shares was down 0.3 percent at 1,347.64 points, following a 7 percent rise from a low hit on Feb. 4.

The euro zone's blue-chip Euro STOXX 50 index was down 0.3 percent, at 3,147.08 points.

The brisk rally - fuelled by a relatively positive earnings season and signs of a pick-up in economic growth in Europe - has propelled a number on regional stock indexes to major resistance levels, with both the UK's FTSE 100 and Germany's DAX trading within sight of record highs.

"Indexes in Europe are still in a bull trend, and it's very strong. But there are key resistances to be crossed. Investors should take advantage of all the dips to buy," Aurel BGC chartist Gerard Sagnier said.

Shares in luxury goods makers featured among the top losers, with LVMH (TLO: LVMH.TI - news) down 1.7 percent, Kering (Other OTC: PPRUF - news) down 2 percent and Hermes down 0.8 percent, as traders pointed to a downbeat note from Credit Suisse analysts who downgraded the sector to 'benchmark' from 'overweight' citing the sector's big exposure to China and other emerging markets.

"The risks of structurally slower China growth as well as the negative impact of China's anti-corruption measures on high-end spending do not yet seem to be adequately reflected in consensus expectations for luxury goods sales growth, which, at 12 percent on a 12-month forward basis, is close to the top-end of its 10-year range," the analysts warned in a note.

Shares in luxury goods makers - which were seen as safe-havens during the heat of the euro zone debt crisis due to their strong exposure to emerging markets - have fallen out of favour among fund managers in the past few months, hurt by doubts about the pace of growth in emerging markets.

LVMH stock is down 10 percent since mid-September, while both Hermes and Kering are down 15 percent over the same period, strongly underperforming a 7 percent rise in the FTSEurofirst 300.

French telecoms stocks also dropped on Wednesday as a price war between the country's operators heated up with Bouygues (Frankfurt: BYG.F - news) Telecom (Frankfurt: NZT.F - news) unveiling a cut-price bundle offer. Iliad (Dusseldorf: IL2.DU - news) sank 4.4 percent and Orange (Other OTC: FNCTF - news) fell 3.1 percent.

Around Europe, UK's FTSE 100 index fell 0.3 percent, Germany's DAX index slipped 0.4 percent, and France's CAC 40 shed 0.5 percent.

Investors were also kept on edge by tensions in Ukraine, with volatile trading late in the European session.

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