* FTSEurofirst 300 down 0.7 pct, Euro STOXX 50 down 0.5 pct
* Syrian crisis fuels profit taking on summer rally
* Rising crude prices boosts energy stocks, pummel airlines
By Francesco Canepa
LONDON, Aug 28 A spike in oil prices dented
airline shares on Wednesday, helping push down European equities
for a third day as the threat of an attack against Syria looked
closer, but boosted oil producers such as Statoil and BG Group.
The prospect of a U.S.-led attack on Syria, possibly within
days, has raised concerns about the impact on the broader
region. That has prompted investors to cash in on an 8 percent
rally in European stocks since late June and buy government
bonds and other assets less reliant on global economic
At 0730 GMT, the FTSEurofirst 300 index of top
European shares was down 0.7 percent at 1,193.91 points and the
euro zone Euro STOXX 50 was 0.5 percent lower at
2,736.48 points. Both indexes suffered their worst daily loss
since June on Tuesday.
The FTSEurofirst 300 is still up 5.3 percent this year but
has pulled back 3.9 percent since mid-August due to an expected
reduction in U.S. monetary stimulus, a political crisis in Italy
and, this week, the situation in Syria.
"There is profit taking here and people are trying to
protect their portfolio ... as a tactical element because they
have performed quite well year to date," said Sergio Trezzi,
head of retail sales and client service for continental Europe
at Invesco, which manages assets worth $730 billion.
"But when you look at the (six to 12-month) strategic asset
allocation, I don't believe the turmoil we're seeing right now
will change (it)."
A fund selector survey by Invesco found 44 percent of
respondents plan to increase their exposure to European equities
over the next 12 months, more than for any other asset class.
Sentiment surrounding Europe has improved on more upbeat
economic data from the region this summer, helping the
FTSEurofirst 300 outperform the U.S. S&P 500 by roughly
1.6 percent since June.
Travel & leisure stocks fell 2.3 percent, led by
airlines such as Lufthansa, as the prospect of
military action against Syria fuelled concern about Middle
Eastern crude supply, jolting oil prices higher.
A cautious guidance comment from Europe's largest hotel
operator, Accor, also weighed on the sector.
The jump in crude prices, however, boosted oil & gas stocks
, which rose 1.7 percent, with Norway's Statoil
up 2.3 percent, also thanks to a new discovery. International
gas and oil producer BG Group L> jumped 2.9
"Energy in particular is a relevant sector given the ...
spike in geopolitical concerns," Robert Parkes, a strategist at
HSBC, said. "That is a sector that investors have shunned and
valuations stand at a pretty attractive level."
The energy sector was trading at 9.3 times its expected
earnings for the next 12 months, the lowest valuation multiple
in Europe, Datastream data showed. Along with utilities and
telecoms, it was among the few sectors trading below their
10-year average multiples.