* FTSEurofirst 300 down 0.4 pct, Euro STOXX 50 down 0.7 pct
* Violence from Iraq to Kenya fuels profit taking
* Alstom extends losses after Siemens-MHI bid
* Actelion jumps 15 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 weighed on travel shares and prompted investors to
cash in on recent outperformers.
Airline easyJet and cruise operators Carnival
both fell more than 1 percent as Brent crude rose to
nearly $113 per barrel on concerns over disruptions to oil
exports from Iraq, the second-largest OPEC producer.
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 future profits.
"Most of the major European airlines are around 65-80
percent hedged for the remainder of the current financial year,"
Goodbody Stockbrokers analyst Jack Diskin 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 last week's profit
warning from Lufthansa.
Underscoring 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.
The FTSEurofirst 300 index of top European shares
shed 0.4 percent to 1,383.95 points, retreating further from a
6-1/2 year high hit last week. The euro zone's blue-chip Euro
STOXX 50 fell 0.7 percent to 3,261.42 points.
French engineering group Alstom extended losses in
late trade after Germany's Siemens and Japan's Mitsubishi Heavy
Industries (MHI) presented a joint offer to the French firm,
challenging a General Electric bid. The U.S. firm was quoted as
saying it would not engage in a bidding war.
"It's not a bid for the entire company ... and GE just said
it won't engage in a bidding war," a London-based event-driven
analyst said. "Overall there's nothing overly positive about
today or anything we wouldn't expect."
Italy's Telecom Italia fell 4.2 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 six
months, benefiting like banks from improving market sentiment
towards southern European economies and policy easing measures
from the European Central Bank 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 eight times its
average for the past three months, compared to FTSEurofirst
volume 20 percent below its 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
The cost of insuring against future swings in euro zone blue
chips, as measured by the Euro STOXX volatility index,
rose 8.6 percent, up for a fourth straight session, although it
remained low in historical terms 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 meeting."
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