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STOXX 600 end flat

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Kering flags Q1 sales drop, top decliner on STOXX 600

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Lonza to buy biologics site from Roche in US for $1.2 bln

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Johnson Matthey ( JMPLF ) to sell medical device parts unit for $700

mln

(Updated at 1650 GMT)

By Khushi Singh and Amruta Khandekar

March 20 (Reuters) - European shares were flat on

Wednesday, pressured by a sell-off in luxury stocks and in the

absence of big bets by investors ahead of a crucial Federal

Reserve meeting later in the day.

The pan-European STOXX 600 index ended largely

unchanged at 505.34 points, with the personal and household

goods index housing luxury stocks, down 1.3% and leading

declines.

Kering shares tumbled 11.9% to the bottom of the

STOXX 600 after the French luxury goods group warned its

first-quarter sales are likely to drop by around 10%, weighed

down by star label Gucci due to weakness in Asia.

Combined with a profit warning from Burberry ( BBRYF ) in January, the

high-end sector is grappling with a worsening slowdown in demand

for luxury goods.

In a sector-wide reaction, other luxury stocks such as LVMH

, Burberry ( BBRYF ), Richemont and Christian

Dior dropped between 1.6% and 3.2%.

"The Kering slump is a warning that the slowdown being seen

in China is having a real impact around the globe. The

post-Covid Chinese recovery has not really happened and clearly

Chinese consumers are now cutting back on luxury items as they

tighten their belts," said Stuart Cole, chief economist at

Equiti Capital.

On the data front, German producer prices fell

year-over-year in February, while highly-anticipated British

inflation cooled slightly more than expected last month.

The UK's FTSE 100 index ended flat.

Investor focus remains on the Fed's monetary policy meeting

later on Wednesday, at the end of which the central bank is

considered certain to keep interest rates on hold, while all

eyes will be on its "dot plot" for more clues on the future path

for rates.

"Nobody is expecting any change in interest rates, but the

big question is whether (Fed Chair) Powell disappoints the

market by suggesting the outlook for rate cuts is still not that

strong going forward," Cole said.

Meanwhile, some top European Central Bank officials,

including President Christine Lagarde, tried to dampen

speculation about a streak of interest rate cuts on Wednesday.

A series of deals from the region also contributed to market

action.

Shares in Lonza rose 5.7% after the Swiss contract

drug manufacturer agreed to buy Roche's Genentech

manufacturing facility in California for $1.2 billion in cash.

Johnson Matthey ( JMPLF ) climbed 7.8% to the top of STOXX

600 after announcing the sale of its medical device components

business to Montagu Private Equity for $700 million.