GLOBAL MARKETS-Stocks retreat from peaks, euro dips
* Euro skids across the board, ECB action fuels fund flows
* Appetite for European shares dented by profit warnings
* Oil climbs on worries over Iraq
PARIS, June 11 (Reuters) - Stocks retreated from recent highs on Wednesday as profit warnings dented investors' enthusiasm for equities while the euro fell towards a four-month low in the wake of upbeat U.S. economic data and the European Central Bank's monetary easing.
Brent futures climbed above $110 a barrel as violence in Iraq prompted worries about the outlook for supply, while a fall in U.S. stockpiles of gasoline pointed to stronger seasonal demand.
Traders were watching the unfolding crisis in Iraq, where an al Qaeda splinter group seized control of the city of Mosul.
"It warrants support of the oil price. We already have Libya out, Iran's exports are low, and there is no prospect of an immediate return for either of them," said Bjarne Schieldrop, analyst at SEB in Oslo.
Profit warnings from Germany's Lufthansa and France's Vallourec dented investors' appetite for stocks following a sharp rally, with Germany's DAX falling 0.9 percent and the pan-European FTSEurofirst 300 index losing 0.4 percent.
But that was balanced in investors' eyes by the strong U.S. May jobs report released last week, which provided the latest confirmation of improving economic conditions after severe winter weather saw the U.S. economy contract in the first quarter.
"There are still question marks on corporate results, as well as on global growth and geopolitical tensions," said Romain Boscher, global head of equities at Amundi, which has 797 billion euros ($1.08 trillion) in assets under management.
"But we keep a positive bias on stocks. The recent slowdown in U.S. growth was mostly due to bad weather and the ECB should be able to thwart deflation."
The euro hovered near a four-month low versus the dollar, down 0.12 percent at $1.3532, with the single currency under pressure due to a widening yield gap between euro zone bonds and their major peers.
A rise in U.S. yields on speculation that the U.S. Federal Reserve could raise interest rates sooner than previously expected has supported the dollar and put pressure on the euro this week.
Investors looked to borrow euros at super-low rates and buy higher-yielding assets abroad, the so-called carry trade.
"The chase for yield looks like it has further to run," said Shane Oliver, head of investment strategy at AMP Capital.
Sterling nudged up to a new 18-month high against the euro after a labour report that carried substantial positives for the British economy but did not necessarily encourage an early rise in interest rates.
Asian stocks dipped from recent peaks, while Japan's Nikkei bucked the trend, gaining 0.5 percent after MSCI's decision to remove South Korea and Taiwan indexes from its review list for reclassification to developed markets, keeping them in the emerging markets classification.
There had been speculation Tokyo equities would take the brunt of rebalancing if Korean and Taiwanese shares were reclassified to developed markets.
German Bund futures were down 0.08 percent, at 144.91, while gold added $1.52, to $1,262.01 an ounce, off a four-month low of $1,240.61 hit last week, while zinc in London and Shanghai hit the highest in around 15 months as improving demand met tight supply, and copper premiums fell further in China as traders faced tougher financing conditions in the wake of a fraud investigation. (Additional reporting by Simon Falush in London, Wayne Cole in Sydney and Raoul Sachs in Paris; Editing by Alison Williams)
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