Loveholidays to postpone $1.3 billion London IPO due to Gulf travel chaos, FT reports

March 3 (Reuters) - Online travel agent Loveholidays is preparing to delay its London Stock Exchange flotation amid market turmoil and travel chaos caused by Iran's retaliation after U.S. and Israeli strikes, the Financial Times reported on Tuesday.

The company had been expected to announce its intention to float in early March, targeting a valuation of up to 1 billion pounds ($1.33 billion), but is now discussing a possible delay, the report said, citing people familiar with the matter.

The firm could now target the period for its listing following the travel-heavy Easter holiday, according to the report.

Loveholidays declined to comment when contacted by Reuters.

The potential delay could mark a setback for the London Stock Exchange's efforts to attract major flotations after years of lackluster IPO activity.

Shares of tour operators and travel agents have seen sharp declines since February 27, with the UK's On The Beach OTB.L down 7%, Jet2 JET2.L falling 6.1% and Germany's TUI TUIGn.DE dropping 11.4%.

European airline stocks also tumbled on Tuesday, with Wizz Air WIZZ.L, British Airways-owner IAG ICAG.L, Lufthansa LHAG.DE and Air France KLM AIRF.PA falling between 5% and 8% as carriers grappled with surging fuel prices and passengers scrambled to rebook flights amid Middle East travel disruptions.

($1 = 0.7509 pounds)