UK property stocks lag flat European indexes on rate rise fears

LONDON, June 13 Fri Jun 13, 2014 3:18am EDT

LONDON, June 13 (Reuters) - British property companies led a pullback in European indexes on Friday after the Bank of England (BoE) flagged concerns about loose mortgage lending and flagged the prospect of a rate hike.

Violence in oil-rich Iraq hit broader market sentiment as it boosted oil prices, with fuel-thirsty airline stocks among the worst hit while oil majors gained.

The euro zone Euro STOXX 50 index was down 0.1 percent at 3,279.73 points while Britain's FTSE was down 0.3 percent.

Property companies British Land and Land Securities were among the top fallers after BoE Governor Mark Carney said interest rates could rise sooner than financial markets expect and that he was concerned by signs that mortgage lending standards were becoming looser.

Airlines easyJet and IAG and cruise operator Carnival also underperformed, all down around 1.2 percent as Brent futures rose towards $114 a barrel.

U.S. President Barack Obama threatened military strikes in Iraq against Sunni Islamist militants who have surged out of the north to menace Baghdad and want to establish their own state in Iraq and Syria.

"I'd rather be short (European stocks) at the moment," said Justin Haque, a pan-European broker at Hobart Capital Markets.

"The market has lived in a blissful state but we're not short of warning signs: there's a war in Iraq and Carney wants to raise rates." (Reporting By Francesco Canepa; Editing by Sudip Kar-Gupta)

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