June 5, 2017 / 4:32 PM / 2 months ago

Energy stocks, Banco Popular weigh on European shares

3 Min Read

* STOXX down 0.13 percent

* Banco Popular drops to new record low

* London-listed travel stocks suffer

* Shares in Qatar's top holdings mixed

* Frankfurt closed for holiday (Updates with closing prices, adds details)

By Danilo Masoni and Helen Reid

MILAN/LONDON, June 5 (Reuters) - European shares slipped on Monday as energy stocks dragged and banks were led lower by Spain's Banco Popular on concerns that it could be wound down.

The pan-European STOXX 600 index fell 0.1 percent, with activity reduced by a public holiday in the region, while Britain's FTSE, which hit a fresh record high on Friday, dropped 0.3 percent.

Banks were the biggest drag to the STOXX index with Banco Popular falling as much as 18 percent to fresh record lows on worries that it could be wound down if it does not find a buyer.

Investors dismissed attempts by the company's chairman, Emilio Saracho, to soothe nerves. In a letter sent on Friday, Saracho told his executives that the bank was solvent and urged them to remain calm and confident.

A trader said the recent price slide made a recapitalisation of Banco Popular hard to achieve, while there could be risks of contagion to other Spanish banks.

Italian broadcaster Mediaset and Spanish subsidiary Mediaset Espana were also big fallers as concerns grew over Vivendi potentially freezing its stake at 10 percent, to comply with the demands of AgCom, Italy's telecoms competition regulator.

The attack in London on Saturday, which killed seven people and injured 48 just days before a national election, dented some tourism-exposed stocks but had no major impact on broader equity markets.

Budget airline Easyjet fell 1.9 percent, and Merlin , which runs attractions including London's Madame Tussaud's waxworks museum, fell 1.6 percent.

European travel and leisure stocks fell 0.8 percent, the worst-performing across sectors.

The German and some other European stock markets were closed for a public holiday, reducing overall activity.

Oil stocks were another drag as the oil price dropped after Gulf states and Egypt cut ties with Qatar, accusing it of supporting terrorism.

Shares in France's Total fell 0.8 percent while Italy's Eni declined 0.6 percent, although BP and Royal Dutch Shell rose slightly.

Meanwhile, shares in companies in which Qatar holds stakes were mixed. Miner Glencore fell 1.2 percent, in line with peers, while utility Iberdrola and Barclays bank gained, and builder Vinci was down just slightly.

In a sign that sell-side enthusiasm for European equities may be starting to wane, Morgan Stanley reined back its position on the region on Monday, saying it now preferred Japanese and U.S. stocks.

In a note entitled "Curbing our Enthusiasm", the bank's strategists said European equities are now a 'consensus overweight', and the positive catalysts of better economic and earnings trends with an increase in inflows had already begun to play out. (Reporting by Danilo Masoni and Helen Reid; Editing by Susan Fenton)

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