We present the spectral analysis of an early XMM-Newton observation of the luminous Seyfert 1 galaxy Mkn 509 . We find the hard ( 2–10 keV ) continuum slope , including reflection , to be somewhat flatter ( \Gamma = 1.75 ) than for a typical BLS1 . The most obvious feature in the hard X-ray spectrum is a narrow emission line near 6.4 keV , with an equivalent width of \sim 50 eV . The energy and strength of this line is consistent with fluorescence from ‘ neutral ’ iron in the molecular torus , and we note the emerging ubiquity of this feature in XMM-Newton and Chandra observations of Seyfert 1 galaxies over a wide luminosity range . We also find evidence for a second emission line at 6.7–6.9 keV , which we attempt to model by reflection from a highly ionised disc . A ‘ soft excess ’ , evident as an upward curvature in the continuum flux below \sim 1.5 keV , can not be explained solely by enhanced reflection from the ionised disc . The RGS spectrum shows only weak discrete emission and absorption features in the soft X-ray spectrum , supporting our conclusion that the soft excess emission in Mkn 509 represents the high energy portion of optically thick , thermal emission from the inner accretion disc .