UPDATE 3-Europe lockdown fears trigger worst stocks sell-off in 3 months

(For a live blog on European stocks, type LIVE/ in an Eikon
news window)

* Travel stocks slump as UK ponders national lockdown again

* HSBC drags banks lower after dirty money scandal

* France's Iliad makes $4.2 bln bid for Poland's Play
(Updates to close)

By Sruthi Shankar and Julien Ponthus

Sept 21 (Reuters) - European stocks posted their worst fall
in three months on Monday as fears of a second wave of COVID-19
infections hit travel and leisure shares, while banks tumbled on
a report about $2 trillion worth of suspect transfers by leading
lenders.

There could be up to 50,000 new coronavirus cases per day in
Britain by the middle of October if the pandemic continues at
its current pace, the country's chief scientist adviser warned.
On Sunday, health minister Matt Hancock said a second national
lockdown was possible.

"We suspect equities would fall sharply and
indiscriminately, similar to what happened in Feburary-March or
in June ... if the rise in new cases in Europe seriously
undermined the global economic recovery," said Simona Gambarini,
markets economist at Capital Economics.

London's FTSE 100 was the worst-hit blue chip index in
Europe, falling about 3.4% in its worst day in more than three
months. UK-focused midcaps in the FTSE 250 dropped 4.0%.

The pan-European STOXX 600 was down 3.2%, a fall
not matched since early June.

Europe's travel and leisure index fell 5.2%, its
worst two-day drop since April, with airlines such as British
Airway-owner IAG plummeting 12.1% and Lufthansa
9.5%.

European banks slumped 5.7% to hover near record
lows after lenders including HSBC and Standard
Chartered were named in a cache of leaked documents
which said they had transferred large sums of suspect funds over
the past two decades.

HSBC's shares in Hong Kong and Standard Chartered's in
London fell on Monday to their lowest since at least 1998.
Barclays and Deutsche Bank, which were also
mentioned in the report, slipped 5.4% and 8.8%, respectively.

On Wall Street, the banking sector fell 4.2% amid a
broader market selloff.

Among other individual stocks, Britain's Rolls-Royce
Holdings shed 10.8% after the aero-engine maker said it
was looking to raise up to 2.5 billion pounds ($3.2 billion) in
an effort to strengthen its balance sheet.

German telecom 1&1 Drillisch plunged 27.8% after
warning that an increase in the cost of its network access deal
with Telefonica Deutschland would hit profits this
year. Its parent United Internet fell 26.1%.

In the latest string of M&A activity, Play Communications
soared 36.7% after French telecoms group Iliad
said it plans to acquire the Polish mobile phone operator in a
3.5 billion euro ($4.15 billion) deal. Iliad slipped 3.0%.

Lufthansa sank 9.5% as it further cut its fleet
and workforce due to the coronavirus crisis.
(Reporting by Sruthi Shankar in Bengaluru and Julien Ponthus in
London; Additional reporting by Sagarika Jaisinghani; Editing by
Shounak Dasgupta and Nick Tattersall)