European shares slip on U.S. rate hike prospects; banks outperform

(ADVISORY - Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). Adds closing prices, details)

* FTSEurofirst index falls 1.2 pct

* Mining, oil shares hurt by weaker commodity prices

* Banks outperform as U.S (Other OTC: UBGXF - news) . rate increase looks more likely

* Travel stocks lower after Egyptair plane goes missing

* Bayer (LSE: 0P6S.L - news) slumps on Monsanto (Hamburg: 1132157.HM - news) move; Thomas Cook (Xetra: A0MR3W - news) disappoints

By Danilo Masoni and Atul Prakash

MILAN/LONDON, May 19 (Reuters) - European shares fell on Thursday as weaker oil and metals prices put pressure on commodities stocks and concern mounted that U.S. interest rates would be raised soon.

However, bank stocks outperformed, helped by the prospect of rising U.S. rates. Minutes from the Federal Reserve's April meeting showed most of its policymakers thought a June increase would be appropriate if the U.S. economy continued to improve.

"This more-than-expected hawkish tone from the minutes is sending European shares lower," Market Securities' chief European strategist, Stephane Ekolo, said, except for "the banking sector, a clear winner in case the Fed start raising rates sooner than what the market anticipated".

Deutsche Bank (LSE: 0H7D.L - news) rose 1.3 percent. A trader said Deutsche would be one of the biggest beneficiaries among European banks if the Fed raises rates, thanks to its U.S. business.

The pan-European FTSEurofirst 300 index ended down 1.2 percent. The basic resources sub-index fell 2.6 percent, while the energy sub-index dropped 2.7 percent.

Copper prices extended losses, weighed down by a stronger dollar, the potential for a U.S. rate increase and worries about lacklustre demand. The stronger dollar also put pressure on crude oil prices.

Bayer fell more than 8 percent, making it the top loser in the FTSEurofirst, after the drugs and chemicals group made a bid for Monsanto. Traders said the move was likely to keep Bayer shares under pressure in the short term.

UBS Global Asset Management said it was "deeply concerned" about the burden on Bayer's finances from a takeover, saying it would prefer the companies to agree a joint venture or a nil-premium merger.

Travel and leisure stocks fell 1.5 percent after an Egyptair flight carrying 66 passengers and crew disappeared on a flight from Paris to Cairo .

Shares (Berlin: DI6.BE - news) in British holiday company Thomas Cook slumped 19 percent, reaching their lowest since March 2013, after it said tourists were avoiding Turkey, its second-most popular destination last year.

Accor (EUREX: 485822.EX - news) , TUI (LSE: 0NLA.L - news) and InterContinental Hotels (Other OTC: ICHGF - news) fell 1.6 to 3.4 percent.

Among airline stocks, Aeroports De Paris (Other OTC: AEOXF - news) fell 1.8 percent. Air France KLM fell 1 percent and BA-owner IAG 2.3 percent. Airbus rose 0.2 percent.

Today's European research round-up

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

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Mike Dolan, Markets Editor EMEA. (Additional reporting by Hakan Ersen in Frankfurt; Editing by Larry King)