You're really close, you just need to do some concatenation:
$('div[data-index="' + event.index + '"] h2').fadeOut();
If this event is attached to the div
in question, though (I can't be sure from the info in the question), it may be much simpler:
panelMouseOver: function(event) {
$(this).find("h2").fadeOut();
},
...or similar.