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Banks lead sectoral declines

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H&M rises on UBS upgrade

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STOXX 600 down 0.3%

(Updated at 0832 GMT)

By Shristi Achar A

June 14 (Reuters) - European shares lost ground on

Friday, with the benchmark index poised for a weekly loss as

investors remained on the sidelines amid the political

uncertainty in France.

The pan-European STOXX 600 was down 0.3% as of 0832

GMT and has lost 1.7% so far this week.

France's benchmark CAC 40 index shed nearly 1.3%,

underperforming the region's bourses, and the risk premium on

domestic bonds hit a seven-year high as investors remained

unnerved by the political situation.

France's leftwing parties will reveal the political

manifesto for their renewed alliance on Friday in a bid to

challenge the far-right's National Rally (RN), leading the polls

for upcoming snap parliamentary elections.

"If (President Emmanuel) Macron's party loses to the RN, he

will likely have to serve the next three years of his presidency

with a legislature dominated by them. Markets worry about this

outcome," Frederique Carrier, head of investment strategy for

RBC Wealth Management in the British Isles and Asia, said in a

note.

"A shift to a more expansive fiscal policy in France could

have wide-ranging repercussions on the region."

Food and beverages and healthcare were

amongst the few bright spots, up around 0.4% each, while most

other sectors were subdued.

European lenders slid 1.1% and led declines, with

French banks BNP Paribas, Societe Generale

and Credit Agricole dropping more than 3% each.

Automobile-related shares extended losses, falling

nearly 0.7% to their lowest levels in more than four months, on

uncertainty over how China might respond to the EU's new tariffs

on imported Chinese electric vehicles.

Germany is reportedly trying to prevent or soften the bloc's

tariff.

On the data front, French consumer prices rose 2.6% in May,

slightly lower from a preliminary reading of a 2.7% increase

published in late May.

Among stocks, British homebuilder Bellway ( BLWYF ) fell 3%

after rival Crest Nicholson rejected its revised and

unsolicited 650-million-pound ($828 million) takeover offer.

Crest Nicholson's shares jumped nearly 8%.

H&M advanced 1.9% after UBS upgraded the world's

second-largest listed fashion retailer to "buy" from "neutral."