Britain's FTSE hits two-week low as Ukraine tensions build
* FTSE 100 drops 1.4 pct
* Geopolitical concerns hurt fund managers, banks most
* Index tests support around 6,700
* Gold miners rally, copper firms hit by China data
LONDON, March 3 (Reuters) - Britain's top share index fell to a two-week low on Monday, led down by asset management firms as stocks most exposed to emerging markets fell on increasing tensions in Ukraine.
The possibility of war between Russia and Ukraine hit stocks that are particularly sensitive to optimism over global markets, such as fund managers Schroders and Aberdeen Asset Management, which fell 4.6 percent and 3.9 percent respectively.
Banks, insurers, mining and energy stocks were other big losers after Ukraine mobilised for war following Russian President Vladimir Putin's declaration that he had the right to invade his neighbour. The confrontation over Ukraine is the most serious between Moscow and the West since the Cold War.
Volatility, an indicator of investor fear, spiked by 24.8 percent, and companies with direct exposure to Russia - including BP - were the hardest hit.
"The complex situation in Ukraine brings potential for heightened volatility in the near term amid concerns of an escalation into a wider conflict," Alan Higgins, UK chief investment officer at Coutts, said.
"Our central scenario is that a wider conflict will ultimately be avoided... As such, our 6-12 month views remain unchanged," he said.
Oil major BP, which has a significant stake in Russia's biggest oil producer Rosneft, fell 1.7 percent, alone trimming nearly 7 points off the index.
Rosneft shares slumped by as much as 8 percent.
The FTSE 100 was down by 96.97 points, or 1.4 percent, at 6,712.73 by 1528 GMT, holding just above the 6,700 level seen as significant by technical analysts.
"I was already bearish in the near-term, and the situation in Ukraine is supporting this view," Fawad Razaqzada, technical analyst at Gain Capital, said. A close below 6,700 would suggest further falls in coming sessions, he said.
"This is a key level of support, as previously it was resistance, and we have the 50-day moving average there as well as the 38.2 percent retracement of the rally from early February," he said, referring to a Fibonacci "golden ratio" that chartists use to analyse the likely depth of a pullback.
Only five stocks were in positive territory, with precious metal mining companies Randgold and Fresnillo the top risers, benefiting from a flight to safety that boosted the gold price.
Shares in miners of other metals suffered. The UK mining index fell 2 percent, hurt by geopolitical concerns and weakness in copper, which slipped on data showing a further drop in factory activity in China, the world's top metals consumer.
The final Markit/HSBC manufacturing Purchasing Managers' Index (PMI) for China fell to a seven-month low of 48.5 in February from January's 49.5, its third straight monthly decline, reinforcing concerns of a slowdown in the world's second-largest economy.
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