* FTSEurofirst 300 down 0.6 pct
* Afren suspends output from Kurdistan, shares weaken
* Nokian Renkaat hit by plummeting sales in Russia
* Monte dei Paschi falls after results
By Tricia Wright
LONDON, Aug 8 European shares dropped on Friday,
sinking for the seventh time in eight sessions, on growing
nervousness after U.S. President Barack Obama authorised air
strikes in Iraq.
Obama said on Thursday he had authorised U.S. air strikes to
blunt the onslaught of Islamist militants in northern Iraq as
well as airdrops of supplies to besieged religious minorities.
"There (are) just no buyers out there, and indexes keep
breaking support levels one after the other," FXCM analyst
Vincent Ganne said.
"People have been caught off guard. The geopolitical risks
have been treated as 'noise' by investors in the past few
months, but now they suddenly realise that it's much more than
London-listed oil producer Afren said it has
suspended output at its Barda Rash oilfield in Iraqi Kurdistan,
the first field to shut in Kurdistan as Islamic State militants
advance towards the oil-rich region.
Its shares fell 1.4 percent.
The Iraq news was met by investors already rattled by
tensions between the West and Russia which, along with weak
European economic data and the prospect of U.S. monetary
tightening, have hit global stock markets in the past weeks.
At 1142 GMT, the FTSEurofirst 300 index of top
European shares was down 0.6 percent at 1,307.10 points, its
lowest level since mid-April. But the index did pare back its
earlier losses as traders cited rumours Russia was seeking to
de-escalate the Ukrainian conflict.
Underscoring the broad market concerns, U.S. funds invested
in European equities suffered their longest outflows streak in
three years in the seven days to Aug. 6 as they bled money for
the eighth consecutive week, Lipper data showed.
Fund managers, fearing that the outflows may have further to
go, were sticking to the sidelines.
"I don't see this trend reversing very quickly, so I would
not step in and buy European shares right now," Hampstead
Capital hedge fund manager Lex van Dam said.
In a further negative sign, shares in Nokian Renkaat
shed 6.2 percent after the Finnish tyre maker
reported a second-quarter operating profit below expectations
due to plummeting sales in Russia.
European airlines also fell, with Air France
losing 2.1 percent, and Lufthansa down 1.7 percent.
Russian Prime Minister Dmitry Medvedev said on Thursday
Moscow was considering banning European and U.S. airlines from
flying transit routes through Russian airspace in retaliation
for tougher sanctions from Europe and the United States.
According to data from Flightradar24, Lufthansa and Air
France-KLM would be hardest hit by a potential closure of the
airspace over Siberia.
Also on the downside, shares in Monte dei Paschi di Siena
dropped 6.8 percent after Italy's third-biggest bank
posted a worse-than-expected loss in the second quarter as
charges on souring loans rose, underlining the challenges the
bailed-out lender still faces to turn itself around.
Britain's Financial Conduct Authority said on Friday it has
banned short-selling in shares of the bank, following similar
action by Italy's regulator Consob.
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 and Francesco Canepa;
Editing by Hugh Lawson)