Retreating oil shares drag European stocks lower
* FTSEurofirst 300 down 0.2 pct, Euro STOXX 50 down 0.2 pct
* BG tumbles after third outlook warning in a year
* Italian stocks up as delays seen in Berlusconi decision
By Blaise Robinson
PARIS, Sept 9 (Reuters) - European shares dipped on Monday, led lower by oil stocks which tracked falling crude prices as expectations of an imminent U.S.-led strike on Syria faded.
Royal Dutch Shell, Total and Repsol fell 0.6 to 1.3 percent each, while Brent crude was down $2 a barrel to just above $114 after U.S. Secretary of State John Kerry said Syria could avoid a strike by turning over chemical weapons within a week.
In the same sector, BG was the biggest loser among European blue chips, tumbling 5.1 percent after slashing its production outlook for the third time in a year, citing delays in getting new projects under way in Egypt and Norway.
The FTSEurofirst 300 index of top European shares ended 0.2 percent lower at 1,228.07 points, retreating from a 3-1/2 week high hit on Friday. The euro zone's blue-chip Euro STOXX 50 index lost 0.2 percent to 2,798.31 points.
Oil stocks have outperformed the market since mid-August, but fading expectations of military action against the Syrian government prompted investors to cash in profits.
"The Syrian situation is quite volatile and there's some profit taking on the bets people made when a military action seemed imminent," said David Thebault, head of quantitative sales trading at Global Equities.
"The tensions have not disappeared, however, and Syria remains the biggest risk for the market at the moment."
Italian stocks bucked the trend, with Milan's FTSE MIB gaining 1.2 percent, further recovering from recent losses as investors bet it could take weeks before a special Italian Senate committee reaches a decision about the potential expulsion of Silvio Berlusconi from parliament.
Investor appetite for Italian stocks has been rising, according to UBS, with the bank's clients snapping up Italian stocks on the back of improving economic data.
UBS's client activity shows Italy enjoying its biggest inflows in four years, while clients also turned net buyers of European equities for the first time in six months.
Germany's DAX ended flat, with K+S jumping 8.2 percent on speculation that potash prices won't drop as much as expected following the breakup of the world's largest producer cartel.
Shares in K+S had plummeted 40 percent after Uralkali , Russia's largest potash producer, in July predicted a decline of more then 25 percent in the potash price after abandoning its export joint venture with Belaruskali of Belarus.
Elsewhere in Europe, UK's FTSE 100 index fell 0.3 percent and France's CAC 40 lost 0.2 percent.
The FTSEurofirst 300 has gained about 11 percent since late June, supported by improved macro economic data from around the world.
"We still think the global growth picture is improving, so have viewed market pull-backs due to the Middle East and Fed tapering concerns as buying opportunities," said Ivor Pether, senior fund manager at Royal London Asset Management.
"We do need to see the encouraging PMIs in Europe translating into better EPS (earnings-per-share) growth, though," Pether added, referring to purchasing managers indexes.
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