** Jefferies says the luxury sector is entering a "battle for minds and wallets," warning that "stagnant property" in China is still "an impediment for a broader re-engagement of aspirational demand"

** It says luxury faces a "very volatile context," as further outperformance now hinges on positive earnings revisions

** It upgrades France's Hermès HRMS.PA to "buy" from "hold", and raises its PT 7% to 2,400 euros ($2,845), citing the brand's strong skew toward affluent consumers benefiting from rising equity markets

** Jefferies keeps Swiss group Richemont CFR.S at "buy," favouring its demographic exposure and higher-beta profile versus peers

** It remains cautious on turnaround names, reiterating "underperform" on Burberry BRBY.L and "hold" on Kering PRTP.PA, saying Gucci's reboot is still too early to call

** Jefferies cuts its PT for Ferrari RACE.MI to 300 euros from 310 euros, keeping its "hold" rating

** Including Monday's move, the European luxury index .STXLUXP is down 6.8% YTD

($1 = 0.8436 euros)

(Reporting by Jerome Terroy)

((jerome.terroy@thomsonreuters.com))