Paris fashionistas fret over strong euro

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PARIS, Oct 3 (Reuters) Jeannie Lee is a fashion buyer for an exclusive U.S. store and is in Paris this week wondering whether her American customers will pay for European designs made expensive by the strong euro.

''As an American buyer in Paris, some things just don't make sense commercially any more because the exchange rate is so high,'' said Lee, who works for top Los Angeles store Satine.

She is in the French capital to spot the latest trends and to stock up on clothes to sell next summer, but she is wary.

''We have to be careful ... For example, yesterday we saw this really cute line of underwear that was retailing at 0 (176 euros). Cotton underwear. It just doesn't work by the time you've brought the exchange rate in.'' Comments like hers are worrying European designers.

In the last year, the euro has risen around 10 percent against both the dollar and yen, climbing to fresh highs over recent weeks and putting some European luxury goods out of reach for all-important American and Asian shoppers.

The European currency has also strengthened against Britain's pound, which industry experts say has made British buyers think twice about splashing out on European goods.

''It is certainly a problem,'' said Didier Grumbach, head of the French fashion federation.

''We have fewer problems in Europe because of the single currency but it certainly is (a problem) for the U.S. and UK.'' FRENCH HANDBAGS Luxury goods accounted for 20 billion euros (.34 billion) of French exports last year so it is no surprise the government is also worried.

Politicians, including President Nicolas Sarkozy have warned repeatedly about the danger to France's economy from the strong euro and pressed the European Central Bank for lower interest rates to hold back its rise.

Complaints have also come from French companies of all shapes and sizes.

''The situation is abnormal,'' Bernard Arnault, told Reuters at a fashion show for Christian Dior, which he owns. ''We would of course prefer if it (the euro) were weaker.'' Arnault's company represents the very top end of the luxury goods market catering to the richest clients who will stay faithful to a handbag or a pair of shoes even if it becomes more expensive. This gives his company the freedom to raise prices if necessary, as it did twice in Japan in 2006.

Slightly lower down the designer food chain is where the real problems lie.

''Unfortunately, what is suffering is not so much the (traditional) luxury lines, but more the contemporary lines,'' said Lee.

Grumbach said clothes and accessories targeting a younger audience are also having a hard time.

''When a product is very expensive and has always been expensive often 10 percent more doesn't make any difference. But for the medium range product or those targeted at young people, it's a problem,'' he said.

REUTERS SR KN1935

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