UPDATE 2-Euro zone shares edge higher on rally in Airbus, luxury stocks

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* Analysts say direct impact of U.S. tariffs on growth
limited
* Euro zone stocks edge higher after two-day sell-off
* Airbus, LVMH, Pernod rebound
* H&M jumps after first profit rise in 2 years

(Updates to close)
By Susan Mathew
Oct 3 (Reuters) - Euro zone shares made small gains on
Thursday after their worst sell-off in two months a day earlier,
as a rebound in Airbus and spirits makers outweighed the latest
round of weak economic data from the euro zone and the United
States.
The blue-chip and wider STOXX 600 pan-European indexes sank
almost 3% on Wednesday after the World Trade Organization
approved 10% U.S. tariffs on European-made Airbus AIR.PA
planes and 25% duties on goods ranging from French wine to
Scotch whisky.
After the initial shock of the decision, intended by the
Trump administration as punishment for illegal EU aircraft
subsidies, traders judged the detailed list of products affected
showed the actual economic impact should be minimal.
The tariffs were not a game-changer for Europe, said Wouter
Sturkenboom, chief investment strategist EMEA & APAC at Northern
Trust Asset Management. "However if Trump decides to go after
the auto sector, we'd take that to heart."
Airbus AIR.PA , luxury stocks like Louis Vuitton-owner LVMH
LVMH.PA , and spirits makers Remy Cointreau RCOP.PA and
Pernod PERP.PA gained between 0.8% and 6.4% as a list showed
that Washington had exempted some products from tariffs.
A prolonged tit-for-tat trade war between Washington and
Beijing and a worsening outlook for the quarterly earnings
season that is just getting underway have soured investor
sentiment towards Europe after a bullish September.
Data on Thursday showed a bigger-than-expected fall in euro
zone producer prices and stalling business activity. On the
other side of the Atlantic, ISM data showed that U.S. services
sector activity slowed in September to a three-year low.
"(The data) suggests that any pretension by the central
banks, particularly the U.S. Federal Reserve, to be in a
wait-and-see phase will simply drop," said Ken Odeluga, a market
analyst at City Index
The euro zone index .STOXXE closed 0.1% higher, while the
broader pan-region index .STOXX closed down 0.02%.
London's FTSE .FTSE dropped 0.6% to close at its lowest
since late August, having hit a seven month low earlier in the
session. Markets in Frankfurt were closed on Thursday for a
local holiday. .L
Oil stocks .SXEP were the biggest drags on the pan-region
index, and some ex-dividend stocks also weighed. O/R
H&M HMb.ST shares, however, jumped 4% after the world's
second-biggest fashion retailer reported its first quarterly
rise in pretax profit in over two years.