* Upbeat China PMI supports Asia stocks, Aussie dollar
* Euro zone business activity growth slows as France lags
* Iraq unrest nudges Brent crude higher
By Nigel Stephenson
LONDON, June 23 (Reuters) - European stocks fell on Monday after euro zone business activity data showed growth slowing, with France a notable laggard, in contrast with upbeat numbers from China that lifted Asian shares and the Australian dollar.
Brent crude oil prices rose towards a nine-month high above $115 a barrel on concerns that unrest in Iraq, where Sunni insurgents seized control of more towns over the weekend, could disrupt supply.
The pan-European FTSEurofirst 300 stocks index fell 0.5 percent, although it remained close to a 6 1/2-year high hit on Friday.
“The market doesn’t like at all the French PMIs, and the German data is also disappointing. It eclipses the upbeat Chinese data from overnight and it’s a reminder that the latest ECB measures are not magic,” Saxo Bank trader Andrea Tueni said.
The euro zone’s flash composite purchasing managers’ index fell to 52.8 in June, below forecast, from 53.5 in May, data provider Markit said.
”The overall picture is one of fairly sluggish growth as opposed to any rip-roaring acceleration, Markit chief economist Chris Williamson said.
Earlier, the French equivalent fell to 48.0 from May’s 49.3. slipping further below the 50 level that denotes expansion. Germany’s PMI showed its private sector expanded for the 14th consecutive month in June.
The euro inched down to $1.3590 after the German data.
Earlier, the HSBC/Markit Flash China PMI showed China’s factory sector activity expanded for the first time in six months in June, offering new signs the economy is stabilising thanks to Beijing’s measures to shore up growth.
“This month’s improvement is consistent with data suggesting that the authorities’ mini-stimulus is filtering through to the real economy,” said Qu Hongbin, chief economist for China at HSBC, referring to a series of measures announced by the government in recent months to spur activity.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.5 percent but later gave up the gains. Tokyo’s Nikkei stocks index hit a five-month closing high as the China data added to the positive mood arising from a dovish U.S. Federal Reserve statement after a meeting last week.
The Aussie dollar, which closely tracks the economic performance of Australia’s top export market China, rallied on the stronger-than-expected Chinese factory survey.
The Aussie advanced 0.6 percent to $0.9440, having reached a session high of $0.9444, within easy reach of this year’s peak of $0.9461 scaled in April.
The dollar slipped to 101.87 yen.
Brent crude oil last stood at $115.38 a barrel.
“Oil prices remain a risk. Brent has been trading above $115/bbl, as the security crisis in Iraq continues to deepen,” Barclays said in a report
The China numbers helped nudge longer-term euro zone government bond yields higher, though comments from European Central Bank President Mario Draghi that interest rates would stay low for a long period supported short-term debt.
Benchmark two-year German yields were flat at 0.041 percent.
“Positive PMI data from Asia moved core rates a bit higher this morning ... (but given) the ECB’s stance, it will take a big surprise in euro zone PMI to see major market moves,” said Jan von Gerich, chief fixed income analyst at Nordea.
Stronger equities saw gold slip further from a two-month high, though safe-haven demand related to Iraq kept it above $1,300 an ounce. It was last at $1,316. (Additional reporting by Shinichi Saoshiro in Tokyo, Blaise Robinson in Paris, Jamie McGeever in London, editing by John Stonestreet)