European stocks slip as Deutsche Bank and airline shares fall

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* Deutsche Bank (LSE: 0H7D.L - news) shares fall, no progress on DoJ situation

* Air France KLM, Lufthansa and easyJet shares fall

* William Hill (Frankfurt: 633847 - news) rises on Amaya (Frankfurt: 0AY.F - news) merger talks

By Sudip Kar-Gupta

LONDON, Oct (HKSE: 3366-OL.HK - news) 10 (Reuters) - European stock markets slipped lower on Monday as shares in Deutsche Bank fell, weighing on the broader European banking sector, while some major airline shares also declined.

The pan-European STOXX 600 index was down by 0.3 percent, with the index down by around 7 percent since the start of 2016.

Deutsche Bank shares fell 2.8 percent, with traders expressing disappointment at a lack of progress in the company's battle against a demand by U.S. authorities for up to $14 billion over misselling allegations. Deutsche Bank shares remain down by around 50 percent so far in 2016.

The pan-European STOXX Europe 600 bank index also fell 1.1 percent.

Deutsche Bank's Chief Executive John Cryan failed to reach a deal with the U.S. Department of Justice (DoJ) at the weekend over the misselling of mortgage-backed securities.

"They had a bit of a bounce up last week, but I would still steer clear of Deutsche Bank. They were never going to sort out the U.S. issues that quickly, and whatever happens, I still think they will need to have a rights issue," said Terry Torrison, managing director at Monaco-based McLaren Securities.

Airline shares also fell.

Air France KLM weakened by 1.1 percent after traders said its September traffic figures was a bit weaker than expected. That weighed on Lufthansa, whose shares fell 1.6 percent.

EasyJet (Other OTC: EJTTF - news) , which issued a profit warning last week, also fell 3.4 percent after SocGen (Paris: FR0000130809 - news) cut its rating on the stock to "sell" from "hold".

However, shares in William Hill climbed 4.5 percent after the British gambling company said it was in merger talks with Canadian online peer Amaya.

Some traders said equities remained their favoured asset class, since record low interest rates in the euro zone and Britain had hit returns on bonds and cash, driving investors to the better returns on offer from the stock market.

"My view remains to buy the dip with interest rates remaining at these low levels," said Lex Van Dam, hedge fund manager at Hampstead Capital LLP. (Editing by Janet Lawrence)