* FTSE 100 drops 0.6 pct, mid caps down 1.1 pct
* Burberry plummets after new strategy, H1 results
* Housebuilders under pressure
* Mid-cap Hikma's trading update disappoints (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)
By Kit Rees and Helen Reid
LONDON, Nov 9 (Reuters) - Heavy losses from luxury group Burberry weighed on Britain's top share index on Thursday which hit a two-week low as investors showed anxiety about the retail and housebuilding sectors.
Britain's blue-chip FTSE 100 index sank 0.6 percent, slightly outperforming a sharp slump in European stocks, while mid-caps dropped 1.1 percent.
Burberry fell 9.4 percent, its biggest one-day loss since September 2012, on the high cost of its plans to move upmarket by focusing on leather goods and fashion and cutting sales to non-luxury stores.
"Today's results were overshadowed by the strategic reset which implies no sales and earnings growth in 2019 and 2020," said Berenberg luxury analysts.
"Despite the short-term downside risk to Burberry's earnings, today's strategy update left us feeling confident about the CEO's vision," they added.
Burberry's shares had gained 34 percent so far this year, outstripping the FTSE 100 which has gained just over 5 percent.
In a weak day for retailers, Sainsbury's shares fell 1.8 percent after lower sales confirmed investors' fears about inflationary pressures on consumers.
"A 2 percent first-half profit beat and confirmed full-year guidance does little to change our concerns around Sainsbury's vulnerability to a weakening UK consumer outlook," said Jefferies analysts.
Housebuilders also suffered, with shares in Persimmon , Taylor Wimpey (LSE: TW.L - news) and Barratt Developments (Frankfurt: 859551 - news) falling by 2.8 percent to 3.9 percent after a survey showed house prices in Britain were no longer rising.
Weak results added to price pressures for mid-cap builder Redrow (LSE: RDW.L - news) , which was down 6.6 percent. Bovis Homes, Crest Nicholson (Frankfurt: A1KCZN - news) and Bellway (Frankfurt: 869646 - news) fell 4.9 to 5.7 percent.
"Redrow's announcement will do little to cool any jitters around market sentiment on new housing," said analysts at Davy Research.
Business media company Informa (Frankfurt: A114PL - news) was the top gainer, up 4.3 percent. The company reported revenue rose in the first 10 months of 2017, buoyed by its global exhibitions business .
Outside the blue chips, a trading update weighed on Hikma , which dropped 5.5 percent after cutting its generic sales forecast again. Its partner Vectura Group (Frankfurt: A0D8J4 - news) fell 7.7 percent.
(Reporting by Kit Rees, editing by Larry King and Alexander Smith)