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Europe shares close lower as Iraq violence weighs

European shares closed lower on Monday amid concerns of escalating tensions in Iraq and rising oil prices.

Symbol
Name
Price
 
Change
%Change
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FTSE
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DAX
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CAC 40
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IBEX 35
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The pan-European FTSEurofirst 300 provisionally closed 0.4 percent lower at 1,385.93 points.

All major country bourses finished the day lower, with the U.K. FTSE 100, German Dax and French Cac down by 0.3 percent, 0.1 percent and 0.6 percent respectively.

Rebels in Iraq seized the northwestern city of Tal Afar on Sunday, solidifying their grip on the country's northern region. The offense came after claims that they executed 1,700 government soldiers over the weekend.

Read MoreIraq rebels seize Northwest town in heavy battle

The attack has stoked fears of renewed instability in the oil-rich Middle East. The price of Brent crude has risen to nine-month highs on the tensions, and analysts predict a further price rise in the short-term.

Meanwhile, Russia cut off its gas supplies to Ukraine, after the two countries failed to agree on a payment scheme. In an official statement, Gazprom said it had filed a lawsuit to try to recover the $4.5 billion it says it is owed by Ukraine.

Read MoreRussia cuts off gas supply: Ukraine minister

Investors were also rattled by violence in Kenya, after reports that Islamist gunmen had killed at least 50 people during a World Cup screening.

In stocks news, the basic resources and healthcare sectors were the only ones to posting gains. The latter was boosted by a 15 percent surge in Swiss biotech company Actelion, after it reported success with an experimental heart and lung drug called Selexipag.

Late in the day, Siemens and Mitsubishi Heavy Industries presented a a joint offer to France's Alstom that included a 7 billion euro ($9.53 billion) cash element and competed with a rival offer by General Electric.

Read More Siemens, Mitsubishi present $9.5B offer to Alstom

On the economic data front, a final reading of May inflation data confirmed a year-on-year figure of 0.5 percent for the euro zone. This came after the European Central Bank unveiled a raft of policy measures to try to combat disinflation two weeks ago.

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