  We present the spectral analysis of an early XMM-Newton observation of the
luminous Seyfert 1 galaxy Markarian 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 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 1.5
keV, cannot 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.
