(Updates prices at settle)
* FTSEurofirst 300 down 0.5 pct, Euro STOXX 50 down 0.9 pct
* Spain, Italy lead losses on weak data, Iberdrola placing
* LVMH leads rally in luxury stocks after update
By Francesco Canepa
LONDON, April 10 (Reuters) - Spanish and Italian indexes led European shares lower on Thursday as investors cashed in on the star performers this year after some disappointing data and more jittery market conditions.
Spain's Ibex 35 and Italy's FTSE MIB, the best performers among major European indexes this year, fell 1.4 percent and 1.3 percent respectively, lagging smaller losses for their peers in Britain, Germany and France .
Sentiment on Italy was clouded by weaker-than-expected industrial output data, while a discounted placement in Iberdrola shares triggered a sell-off in Spanish utilities.
Spanish and Italian shares have rallied more than 25 percent since June 2013, leaving them trading at the highest valuation versus pan-European stocks since 2006, Datastream data showed.
Market volatility in recent weeks - triggered by economic and geopolitical concerns in emerging economies from Ukraine to China at a time when the Federal Reserve is tightening its purse strings - was leading some investors to take profits on the best performers.
"For people who've called that trade ... we believe it is prudent to err on the side of caution and take some profit," Arran Lamont, equity trading strategist at Citi, said.
"At the moment macro issues are clouding the view somewhat, and accordingly we are adjusting for a more cautious period of time in the short term."
The pan-European FTSEurofirst 300 index fell 0.5 percent to 1,331.04 points while the euro zone blue chip Euro STOXX 50 index fell 0.9 percent to 3,152.86 points.
Luxury goods makers surged, however, as Louis Vuitton owner LVMH posted better-than-expected quarterly sales in a key division, easing concerns over the potential impact of turmoil in emerging markets.
"Given the tough trading conditions highlighted by soft luxury peers - we believe these results are reassuring," Barclays analysts wrote in a note.
Shares in LVMH rose 3.2 percent, Christian Dior advanced 1.9 percent, while Richemont progressed by 1 percent.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Additional reporting by Tricia Wright; Editing by Toby Chopra)