BUZZ-DNO: shares fall more than 4 pct on fighting near Kirkuk

** DNO (LSE: 0MHP.L - news) shares down 4.3 percent as Iraqi forces launch attack to retake the oil-rich city of Kirkuk from Kurdish fighters

** The fighting endangers revenues of Kurdistan Regional Government (KRG) from oil fields near Kirkuk producing around 350,000 barrels of oil per day, Trond Omdal at Oslo-based Pareto Securities brokerage says

** "While DNO-operated fields are not affected by this, the Kurdistan Regional Government (KRG) is very dependent on revenues from the fields near Kirkuk... In the worst case scenario, if the Iraqi government captures those fields, the KRG will be cut off from the revenue stream," Omdal says

** Earlier on Monday, DNO reported the first payment of $4 million under the Aug. 1 agreement with KRG, representing three percent of gross Tawke field revenues during August.

** News about the payment may have dampened the fall in DNO shares, Omdal says

** Shares (Berlin: DI6.BE - news) of DNO's partner, London-based Genel, are down by 8 pct

** Iraq launched the operation in the multi-ethnic region early on Sunday, amid an escalating crisis between the Iraqi government and the KRG over the Sept. 25 referendum.

** Oil markets jumped on Monday on the fighting near Kirkuk, rising concerns about oil exports from the OPEC's second-largest producer.