European shares touch 2-month lows on China concerns

* FTSEurofirst 300 down more than 3 pct this week

* Weak yuan, oil prices put pressure on market

* Bearish broker comments hit Dialog shares (Adds details, updates prices)

By Sudip Kar-Gupta and Danilo Masoni

LONDON/MILAN, Dec 11 (Reuters) - European shares fell on Friday on concerns that weakness in the Chinese yuan could weigh on the global economy, while a continued slump in oil prices added to the gloomy mood before a widely expected rise in U.S (Other OTC: UBGXF - news) . interest rates next week.

The pan-European FTSEurofirst 300 index fell 1.4 percent to its lowest level in around two-month lows, while the euro zone's blue-chip Euro STOXX 50 index < .STOXX50E> also declined by a similar amount.

"We have the yuan at 4-1/2 year lows and that is causing unease in China and abroad. Last time the yuan fell like this, it caused a jolt for markets and anyone exporting out to China, like the auto makers and luxury brands, will feel the pain from a weaker yuan." Jasper Lawler, market analyst at CMC (BSE: CMC6.BO - news) , said.

Shares (Berlin: DI6.BE - news) of French carmaker Renault (Xetra: 893113 - news) , watchmaker Swatch, fashion house Hugo Boss (Xetra: BOSA.DE - news) were down 3 to 4 percent.

The FTSEurofirst is down by more than 3 percent so far this week and also down around 6 percent since the start of December, after the European Central Bank disappointed some investors with only limited new economic stimulus measures this month.

"Markets continue to discount dissappointmentr over the ECB. You add oil prices making new lows, worries over U.S. high yield, China deflation and a mini credit crisis in Italy, then you have the cocktail that is weighing on markets," said Giuseppe Sersale, fund manager at Anthilia in Milan.

The STOXX Europe 600 Oil & Gas Index fell 1.8 percent, with crude oil prices hitting fresh seven-year lows on Friday after the International Energy Agency (IEA) warned global oversupply could worsen in the new year.

French advertising group Publicis (Paris: FR0000130577 - news) fell 1.8 percent after losing a U.S. advertising account with L'Oreal ( OREP.PA) to rival WPP (LSE: WPP.L - news) , whose shares outperfomred to edge 0.1 percent lower.

Shares in companies exposed to South Africa, such as British financial groups Old Mutual (Other OTC: ODMTY - news) and Investec (LSE: INVP.L - news) , also dropped as South African financial stocks slumped in the wake of the sacking of the country's finance minister.

Dialog Semiconductor (Xetra: 927200 - news) 's shares ( DLGS.DE) fell around 6 percent, with traders citing negative comments on the outlook for the company from Bankhaus Lampe.

In spite of the pullback on markets this month, the FTSEurofirst 300 index remains up by around 4 percent since the start of 2015, helped in part by the ECB's policies which have supported a recovery in the euro zone economy.

Today's European research round-up (Editing by Gareth Jones)