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* German shares lose 1.3%, the most among regional peers
* Travel & leisure sector leads losses as oil prices rise
* German unemployment rises more than expected in December
* Cellnex rises on deal to buy Portuguese telecoms tower
(Updates prices to close)
By Susan Mathew
Jan 3 (Reuters) - European shares slipped from near record
highs on Friday after a U.S. air strike in Iraq that killed a
top Iranian commander increased Middle East tensions and spurred
moves out of risk assets, while an oil price surge hammered
airline stocks.
Iran's Supreme Leader Ayatollah Ali Khamenei vowed harsh
revenge after Iranian Major General Qassem Soleimani, architect
of the country's spreading military influence in the Middle
East, was killed in the air strike at Baghdad airport.
Leaders from many other countries urged restraint. But Ken
Odeluga, market analyst at City Index said: "As such, chances
that a further escalation of tensions with Washington can be
avoided, appear to be low."
The pan-European STOXX 600 index was down 0.3%,
with German shares having their worst day in a month as
Lufthansa slumped 6.5%.
Along with losses in airlines Air France and
EasyJet Europe's travel and leisure sector shed
1.6%, on fuel price concerns as oil jumped more than 3%.
The jump in oil prices lifted the regional energy sector
index to seven week highs which tied in with a weaker
pound to help London's FTSE buck the trend.
"Even if we hear nothing over the weekend the events have
shown that this is a complex geopolitical situation and the
ongoing uncertainty will have to be dealt with for a while,"
said Ingo Schachel, head of equity research at Commerzbank.
Global financial markets had started the new decade on a
high note on improving U.S.-China trade relations, further
monetary easing in China and a brightening economic outlook.
But data on Friday showed unemployment Germany rose more
than expected in December, while U.S. manufacturing for the same
period saw a bigger-than-expected dip.
Friday's moves tipped an otherwise flat week for Europe into
red.
In corporate news, tobacco companies Match and
British American Tobacco rose to the top of the STOXX
600 after the U.S. Food and Drug Administration exempted menthol
and tobacco from a list of popular e-cigarette flavours that it
had banned under new guidelines.
Cellnex Telecom SA rose 2.3% after agreeing to buy
Portuguese telecommunication tower operator OMTEL for around 800
million euros ($894 million).
Trading for the first time this year, Swiss stocks,
rose 0.8% after a near 26% rise last year as a investors bought
into consumer goods.
(Reporting by Susan Mathew and Sagarika Jaisinghani in
Bengaluru, additional reporting by Shreyashi Sanyal
Editing by Shailesh Kuber/Arun Koyyur/Jane Merriman)
