* Lloyds TSB, Postbank fall on German consolidation talk
* Energy stocks gain on higher oil price
* British property companies weaken after brokerage comment
By Sitaraman Shankar
LONDON, June 23 (Reuters) - European shares were lower in
early trade on Monday, despite a rise in energy stocks, as
banking sector consolidation talk hit Lloyds TSB <LLOY.L> and
Postbank <DPBGn.DE>.
At 0908 GMT, the FTSEurofirst 300 <> index of top
European stocks was down 0.2 percent at 1,219.58 points.
Heavyweight energy stocks Royal Dutch Shell <RDSa.L>, BP
<BP.L> and Total <TOTF.PA> added 0.3 to 0.8 percent as oil rose
$1.85 a barrel to $137.22, driven by tensions between Israel and
Iran.
Germany's Commerzbank <CBKG.DE> rose 3.6 percent after
people familiar with the matter said Lloyds TSB <LLOY.L> was
considering acquisitions in Germany that could involve Allianz's
<ALVG.DE> Dresdner bank unit, over which Commerzbank is in
advanced talks.
Allianz gained 0.5 percent, but Lloyds fell 2.2 percent.
Deutsche Postbank <DPBGn.DE> slid 4.3 percent as traders
said the bank, a takeover target, may not fetch an attractive
deal in the face of growing interest in rival Dresdner.
Hypo Real Estate <HRXG.DE> led German losers, falling 2.1
percent as private equity investor JC Flowers said it had
received offers from shareholders to tender about 18.5 percent
of the company as of Friday afternoon. It is looking to buy up
to 24.9 percent of Hypo Real.
"Markets are oversold after last week, and that in itself
should give us a few days of respite," said Mike Lenhoff, chief
strategist at Brewin Dolphin.
"We've got the Fed this week, and they will allude to
growing concerns about inflation and inflation expectations, so
any upside on stocks is limited by everybody's worries about
inflation and higher oil prices."
The Federal Reserve, which has bolstered equity markets with
2.25 percentage points in rate cuts so far this year, is
expected to keep rates steady at 2 percent when it announces its
verdict on Wednesday.
High inflation has also made the European Central Bank sound
increasingly hawkish, raising the prospect of a rate increase in
July that would be negative for equities.
IFO UNDERLINES WORRIES
German corporate sentiment weakened significantly in June,
the closely watched Ifo survey showed on Monday, suggesting
economic activity in Europe's largest economy is cooling.
"Reasons for the worse than expected data are the high oil
price and the ECB outlook: if the European Central Bank is
raising interest rates, many investment decisions will at least
be reconsidered -- and that in the context of an increasingly
weaker economic situation," said Thomas Amend at HSBC Trinkaus.
Among other major movers, Spanish bank Popular <POP.MC>
topped gainers in Europe with a 6.3-percent jump after a company
acting on behalf of a group of Mexican investors says it wants
to buy 20 percent of Popular.
British drugmaker Shire <SHP.L> jumped 4.2 percent to top
British gainers after a Goldman upgrade.
But property stocks fell on price target downgrades from
HSBC and a bearish survey on British house prices from
Rightmove.
Land Securities <LAND.L> fell 3.7 percent and Liberty
International <LII.L> fell 2.6 percent.
(Editing by Sue Thomas)
