PARIS (Reuters) -Shares in LVMH were on course for their biggest one-day drop in a year on Wednesday after the luxury bellwether missed third-quarter sales forecasts, dragging down the broader sector and erasing gains sparked by China's stimulus measures.

The stock was last down around 4% after falling as much as 7% in early trading. Smaller rival Kering, whose brands include Gucci, was down 3%, with Hermes down 1.7% and L'Oreal down 4.3%.

LVMH, whose brands include Moet & Chandon champagne, Louis Vuitton fashions, and Tiffany & Co jewellery, late on Tuesday posted its first decline in quarterly sales since the pandemic as demand in China and Japan weakened.

Chinese consumer confidence has sunk to COVID-era lows, the company told analysts, noting a "marked deterioration" at its fashion and leather goods business, home to Louis Vuitton and Dior, with sales in mainland China at the division falling by a mid-single digit percentage.

"LVMH's Q3 trading update failed to reassure, suggesting that trends are actually softer than feared," wrote investment bank JP Morgan, keeping a "neutral" rating on LVMH shares.

Weakness in Chinese demand will likely be seen across the sector, "with no one in our view completely immune," it added.

China has been a major source of concern for luxury sector investors. Economic stimulus measures briefly fuelled hopes of a recovery, but luxury stocks have been volatile amid shifting expectations.

Analysts have been lowering forecasts for the sector in recent weeks and had low expectations for the third quarter, with UBS predicting it would be the worst in four years, with a 1% decline in organic sales year-on-year.

Kering reports quarterly sales on Oct. 23 and Hermes on Oct. 24.

($1 = 0.9189 euros)

(Reporting by Mimosa Spencer, Dominique Patton, Piotr Lipinski, Amanda Cooper;Editing by Barbara Lewis and Mark Potter)