MILAN: European shares slipped on Monday with travel stocks leading the declines after Britain imposed a two-week quarantine on travellers returning from Spain after a surge in coronavirus cases.

The pan-European STOXX 600 closed down 0.3%, extending declines after it recorded its first weekly fall in four on Friday.

Travel and leisure stocks dropped 3.4%, with UK-based airlines and tour operators such as TUI, Easyjet, British Airways-owner IAG falling between 6% and 11.3%.

The broader index sank to a two-month low, further cementing its status as the worst performer in Europe this year with a 40% loss.

Adding to the sector's woes, Ireland's Ryanair cut its annual passenger target by a quarter and warned a second wave of Covid-19 infections could lower that further.

Lufthansa and Air France dropped about 5% each after the British government said it was watching the situation in Germany and France closely.

Spanish stocks fell 1.7%, lagging its European peers, also hit by a weakness in banking shares.

French car parts group Faurecia fell 6.4% after saying that it expects to return to profit and cash generation in the second half of the year, helped by cost controls.

Ubi Banca fell 8.8%, while Intesa Sanpaolo slipped 0.8% after the expiry of a deadline for investors to buy Ubi Banca's shares and tender them in Intesa Sanpaolo's takeover offer, the day before the formal end of the offer.