* FTSEurofirst 300 down 0.2 pct, Euro STOXX 50 down 0.3 pct
* Violence from Iraq to Kenya fuels profit taking
* Airlines, cruise operators among worst hit as oil surges
* Actelion jumps 14 pct on positive results for Selexipag
By Francesco Canepa
LONDON, June 16 European stocks edged lower on
Monday, adding to last week's retreat as mounting violence from
Iraq to Kenya pummelled travel shares and prompted investors to
cash in on recent outperformers.
Airlines and cruise operators such as Carnival and
easyJet both fell more than 1 percent as Brent crude
rose to near $113 per barrel on concerns over
disruptions to oil exports from Iraq, the second-largest OPEC
Sunni Islamist insurgents have routed Baghdad's army and
seized the north of the country, threatening to dismember the
state and unleash all-out sectarian warfare across a crescent of
the Middle East.
While airlines tend to lock in prices for their immediate
fuel needs using financial derivatives known as hedges, higher
oil prices in the coming months would affect their profits from
"Most of the major European airlines are around 65-80
percent hedged for the remainder of the current financial year,"
Jack Diskin, an analyst at Goodbody Stockbrokers, said.
"If oil prices stay at these levels, the cost of hedging ...
will become more expensive and that will impact their
performance next year."
The STOXX Europe 600 Travel & leisure index fell for
a fourth straight session, also pummelled by a profit warning at
Lufthansa last week.
Underscoring the bearish sentiment on the sector, Wizz Air,
central eastern Europe's largest airline, shelved plans to list
its shares on the London Stock Exchange on Monday, citing
current market volatility in the airline business.
BANKS AND BIOTECH
The FTSEurofirst 300 index of top European shares
was down 0.2 percent at 1,386.63 points by 1346 GMT, retreating
further from a 6-1/2 year high hit last week.
The euro zone's blue-chip Euro STOXX 50 index
was down 0.3 percent at 3,272.02 points.
The best-performing sectors this year were among the worst
hit on Monday, with Spanish banks dropping 1.3
percent after surging 18 percent since the start of 2014.
The selloff was fuelled by comments by European Central Bank
Governing Council member Ewald Nowotny, who told a newspaper the
ECB's stress tests may end up being too tough.
Italy's Telecom Italia fell 4.6 percent to the
bottom of the FTSEurofirst after shareholder Mediobanca
said it would quit an investor pact which controls the
phone company, paving the way for a possible sale of its stake.
Telecom Italia's shares had risen nearly 50 percent in the
previous six months, benefiting, along with banks, from
improving market sentiment towards southern European economies
and policy easing measures from the ECB earlier this month.
Swiss biotech group Actelion Ltd bucked the trend,
surging nearly 15 percent after it said an experimental heart
and lung drug met its primary goal in a study, giving it a
potential second big seller.
Trading volume on Actelion was brisk at six times its
average for the past three months, compared to FTSEurofirst
volume of less than half of the index's own average
GEOPOLITICS DRIVES MARKET
Investors were also rattled by violence in Kenya, where at
least 48 people were killed and others wounded when more than
two dozen unidentified gunmen attacked a coastal town overnight.
Elsewhere, Russia cut off gas to Ukraine in a dispute over
unpaid bills that could disrupt supplies to the rest of Europe
and set back hopes for peace in the former Soviet republic.
Over the weekend, 49 Ukrainian military personnel were
killed when rebels shot down a cargo plane over the airport of
the eastern city of Luhansk.
The cost of insuring against future swings in euro zone blue
chips, as measured by the Euro STOXX volatility index,
rose for a fourth straight session to take its rise for the past
week to 16 percent, although it remained low in historical term
at around 15 points.
"Geopolitics is driving the market again, with worrying news
coming from Iraq, but also Kenya and Russia," said Guillaume
Dumans, co-head of research firm 2Bremans.
"Overall, there's a lack of positive momentum since the ECB
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Blaise Robinson in Paris; Editing by