* Roche falls as Aphinity study results disappoint
* Vestas Wind jumps on new wind turbine launch
* Stronger euro to weigh on European equities - MS (Adds closing prices)
By Helen Reid
LONDON, June 6 (Reuters) - European shares extended their fall on Tuesday, with healthcare stocks particularly weak, as a diplomatic spat in the Middle East weakened appetite for risky assets across the board.
The pan-European STOXX 600 benchmark dropped 0.7 percent, falling for a second session, while euro zone stocks and blue-chips followed suit.
The greatest downward pull came from healthcare stocks.
Swiss heavyweight drugmaker Roche fell 5.5 percent, its biggest one-day drop in 30 months, after investors were disappointed by findings in its Aphinity study for a key breast cancer treatment.
Analysts at Liberum said they believed the study, which showed lower disease-free survival rates than expected with Roche’s treatment, could make clinical acceptance more difficult.
Medical products company Convatec also fell 3.9 percent after shareholders Nordic Capital and Avista sold 250 million shares, raising 805 million pounds.
A rift in the Middle East between Qatar and neighbours Saudi Arabia, United Arab Emirates, Egypt, and Bahrain caused oil to fall further below $50 a barrel, but after initial losses energy stocks recovered to end up 0.15 percent.
In an early sign of Qatar’s isolation affecting companies operating there, Norsk Hydro fell as much as 2.3 percent after it said exports from the Qatalum aluminium plant in Qatar, a joint venture with Qatar Petroleum, were blocked by the dispute. The company said it was seeking other routes. Its shares pared most of the losses to end down 0.1 percent.
Utilities were the best performers, up 0.6 percent, as investors fled to safety.
Sell-side enthusiasm on European equities seemed to moderate as Morgan Stanley said positive catalysts for the region were beginning to fade.
“Europe has had a very strong run, and tactically it makes sense to look for a more moderate period for a while,” said Morgan Stanley equity strategist Matt Garman.
A stronger euro, which weighs on foreign-earning European companies, diminishes the case for European equities, he said.
“Rarely have the currency and positive equity market performance been correlated, and when they have, it has been politics related,” Garman added, saying relief after the French elections had been felt across asset classes.
The euro has gained 5.6 percent against the dollar over the past two months, and Morgan Stanley strategists expect it to rise further.
Among the handful of gainers, Vestas Wind rose 4.7 percent after MHI Vestas, a joint venture with Mitsubishi Heavy Industries, said it was launching a new wind turbine.
Also among top gainers was Lufthansa, rising 1.2 percent after the German airline’s CEO said he was optimistic on demand and improving traffic from the United States and Asia.
Spain’s troubled Banco Popular fell 6.2 percent to hit another record low after Barclays cut its price target on the stock.
The bank’s shares have lost more than half their value over fears it could be wound down by regulators if it fails to find a buyer.
$1 = 0.7732 pounds Reporting by Helen Reid and Danilo Masoni; Editing by Larry Kingter